27
May
2013
Great Moments in Paradox History
“War Is Peace.” — George Orwell, 1984
“It became necessary to destroy the town to save it,” US military official quoted by Peter Arnett.
“I’ve abandoned free market principles to save the free market system.” — George W. Bush
“If you are worried about the dangers of an extended period of low interest rates, the worst possible thing the Bank of Canada could do would be to start raising them now.” — Nick Rowe
Rowe would go from a good economist to a great economist if he just stopped trying to not sound kooky to avoid resentful attention from his statist peers.
“Because if the Bank of Canada tightens monetary policy now, and this causes the economy to slip back into recession and disinflation, that would require an extended period of even lower interest rates in the future.”
This comment is either a moral capitulation and fatalist determinism, in that we are powerless to stop bad courses of actions from taking place, thus making them inevitable as laws of nature, or it is a misunderstanding of what it really means to argue that artificially low interest rates hamper economic and social progress and that stopping/reducing the fuel now will have fewer negative consequences than stopping/reducing the fuel later on.
Is it really so hard to write that a smaller correction now is less painful than a larger correction later on? Does Rowe actually believe that corrections can be postponed indefinitely by inflation? Money allows one to accomplish a lot of things. To the wealth seeking individual, it is hard to accept that the benefits of money has limits, and indeed can have detrimental consequences. Most wealth seeking individuals spend their entire adult lives seeking more money, and as they become more and more prosperous throughout their lives, they come to connect more money with more real prosperity in a universal sense, subject of course to constraints that exclude hyperinflation. It is not a large jump to assume that more money can have benefits in the economy as a whole. After all, if it is true that you making more money is good for you, and if the same thing is true for your neighbor, and every other individual in abstracto, then is it really so difficult to believe that maybe the Moneteynesians might have a point that only absolute dogmatism would feel compelled to deny?
I think folks like Rowe, who are so close to getting it, but not quite, have to seriously attempt to understand how their standard of living is the result of their own activity in economic coordination in a division of labor. They have to seriously study how their own activity is coordinated with other individual’s activity, and how that is what enables their efforts to bring about wealth. They should understand how one’s efforts to make more money are only beneficial to themselves and others if their real activity is regulated by an effecient monetary order, and that their real activity can potentially be detrimental to themselves and others in the long run, despite making more money in the short run, if the monetary order is not efficient.
How hard is it to convince wealthy homeowners during a boom that their real activity is not sustainable vis a vis others in a division of labor? That their activity is actually detrimental, which is not entirely their fault? Most likely they’d flip their noses and say get real.
Same thing I think is true for economists. We have to feel placated and safe just because “output” and “employment” are growing. That we should fear inevitable corrections as inherently evil, that they can be eliminated by just doing what is most easily believes: more money and economic problems will go away.
Economic calculation is vastly more important than the quantity of money and volume of spending. Economists like Rowe, who are close to getting it, have to understand money as a tool by which individuals coordinate their investment, where should one individual or small group of individuals monopolize the whole money system, this coordination is severely hampered.
“This comment is either a moral capitulation and fatalist determinism…”
Or a sober assessment of what would actually occur. One of the three.
One can’t scientifically predict the future the economy, Gene. “What would actually occur” is overzealous.
And there was more than just a prediction of Fed action. There was also a critique of the anti-inflation crowd, with recommendations of what they should and should not desire.
He’s saying that if I (or anyone else) thinks artificially low interest rates are problematic, then we should…advocate for artificially low interest rates because if the Fed raises them, we’ll have a recession and the Fed will be forced, by the power of Zeus atop Mount Olympus, to artificially lower interest rates once again.
It seems your view is the fatalist determinism route.
I think Nick Rowe understands the argument that economies can have “too much” money even though individuals don’t think they could. That’s a point most children get.
It’s easy to say that 1000000% price inflation is too much money, and -100000% price deflation is too little.
It’s the grey area that the children get confused and think they know all the answers just because the parents are imposing their own authority and we’re supposed to take it as a “given” and pretend a scientific answer exists.
“If you are worried about the dangers of an extended period of low sugar diets, the worst possible thing you could do would be to start eating more sugar now.”
Can I doctor say this to an incipent diabetic, or would that make him a capitulating fatalist?
Neither, for your example doesn’t make sense.
The worst thing to do would be to encourage extended periods of low blood sugar given that the diabetes patient is actually suffering from low blood sugar and needs higher blood sugar now.
As I am sure you know, all Rowe is saying is that if the central banks implements a policy that will reduce the supply of money in a situation where demand is already high then this is very likely to keep the economy in a depressed state with low interest rates for longer than of the central bank accommodated the demand for money.
Rowe’s post was actual centered around this apparent paradox in monetary theory, so its kind of odd to highlight it as if its some sort of slipup on his part.
Rowe’s post was actual centered around this apparent paradox in monetary theory, so its kind of odd to highlight it as if its some sort of slipup on his part.
And George W. Bush knew exactly the irony of his statement, which is why he made it. It’s still paradoxical and wrong, in my mind, just like Nick’s statement.
I just looked up the Bush quote and couldn’t resist quoting the whole thing…
“I’ve abandoned free market principles to save the free market system. I think when people review what’s taken place in the last six months, uh, and put it all in one, in one, (sigh), you know, in one package, they’re realize how significantly we have moved:”
I get that you’re trying to be amusing here , but if you’re comparing Bush’s paradoxical statement with Rowe’s then I don’t think it really works.very well.
Not sure how adding the “uhs” and “sighs” (which make it a “full quote”) change anything, Transformer.
It doesn’t change anything – it just amused me.
“Rowe’s post was actual centered around this apparent paradox in monetary theory, so its kind of odd to highlight it as if its some sort of slipup on his part.
And George W. Bush knew exactly the irony of his statement, which is why he made it. It’s still paradoxical and wrong, in my mind, just like Nick’s statement.”
Bob, it isn’t wrong, at least what Rowe said. As for George W bush, well, its a question of the lesser of the two evils.
MF, you are utterly clueless as always. In the fiat system, there will always be recessions, Who is to say that, (according to your reasoning at least!) we can periodically have mild “corrections” to stop inflationary pressures, and then resume growth after NGDP has stabilized? It’s like the flaw in the arguments of Mises, Rothbard, and Ayn Ran, who say that a mixed economy cannot endure, it must either turn one way or another. Ummm, no. A mixed economy can endure, like a see-saw, tending one way for a generation, then flipping back another way. This can continue indefinitely.
your logic is sloppy, your conclusions are unsound, and your mind is closed. Because you won’t subject yourself to a falsifiability tests, (even theoretically?.. Apodictic certainty my a**!) you will never learn, or grow or understand new things. Such is the life of the faith based fanatic.
Edward,
Right, Mises’s argument:
“Thus the doctrine and the practice of interventionism ultimately tend to abandon what originally distinguished them from outright socialism and to adopt entirely the principles of totalitarian all-round planning”
Mises, L. 1996. Human Action: A Treatise on Economics (4th rev. edn), Fox and Wilkes, San Francisco. pp. 723–724.
That is, mixed economies should lead to full command economies and chaos.
That’s garbage.
Isn’t this the direction we are headed?
No. There’s been considerable deregulation of markets, privatisation, capital account liberalisation, exchange rate liberalisation, labour market deregulation, financial market deregulation, and retreat from fiscal policy since the 1970s. Yet bubbles and financial crises have increased considerably in comparison with the 1946-1970s period. Economic instability has increased.
The correlation is between increased deregulation/liberalisation and greater economic instability.
Not really, there has been a correlation between lack of demand and instabity. That’s where I disagree with u LK.
Just look at the Internet bust vs the housing bust LK in the former, the CB acted quickly, and despite the fact that the losses were BIGGER within the tech sector , compared to the housing market, the tech bubble bursting didn’t infect the rest if the economy and cause the calamity that the housing bubble did because the fed acted quickly
“Just look at the Internet bust vs the housing bust LK in the former, the CB acted quickly, and despite the fact that the losses were BIGGER within the tech sector , compared to the housing market, the tech bubble bursting didn’t infect the rest if the economy and cause the calamity that the housing bubble did because the fed acted quickly.”
The housing bubble was one consequence of the Fed not allowing corrections after the tech bubble.
You’re arguing as if the mitigated recession after the tech bubble, due to Fed inflation, was a “success.”
Yet here we are after the Fed reinflated after the housing bust, and now the big issue is government finances.
You don’t see a growing problem here?
A correlation between “lack” of demand and instability is not inconsistent with instability causing the “lack” of demand. It does not necessarily prove the causality is only the other way about.
Do we really need to go down the route of explaining that correlation does not equal causation? Maybe if it’s in crayon it’ll be clearer for you.
Two bigots disagreeing. Priceless.
“There’s been considerable deregulation of markets, privatisation, capital account liberalisation, exchange rate liberalisation, labour market deregulation, financial market deregulation, and retreat from fiscal policy since the 1970s. ”
That’s either a lie, or blatant disregard for empirical facts.
No LK, regulations have massively increased since the 1970s. The size of the Federal Register, has increased substantially since the 1970s.
The fleeting instances of “deregulation” that have occurred are far, far, FAR outnumbered by the increase in regulations.
“Yet bubbles and financial crises have increased considerably in comparison with the 1946-1970s period. Economic instability has increased.”
So has credit expansion and inflation.
Coincidence? Naaaaaaah!
“regulations have massively increased since the 1970s. “
No doubt all these just slipped your mind:
Depository Institutions Deregulation and
Monetary Control Act (1980)
Garn–St. Germain Depository Institutions Act (1982)
Riegle-Neal Interstate Banking and Branching Efficiency Act (1994)
Financial Services Modernization Act of (1999) = Gramm-Leach-Bliley Act
Commodity Futures Modernization Act (2000).
The SEC’s Voluntary Regulation Regime for Investment Banks (2004)
And no doubt Carter’s and Reagan’s deregulation was just all just imaginary.
Presumably also the capital account liberalisation when capital controls were abolished in many nations was just made up.
“No doubt all these just slipped your mind:”
1980s: 52,992 pages per year average.
1990s: 62,237 pages per year average.
2005: 73,870 pages.
2010: 81,405 pages.
In 2013 alone, the Register has published about 590 items related to the Dodd-Frank Wall Street Reform and Consumer Protection Act.
https://www.federalregister.gov/articles/search?conditions%5Bterm%5D=%22dodd+frank%22&order=newest&page=2
In principle, though this did not occur, letting banks do more of what they want with federal reserve money is in fact a deregulation of state activity, not a deregulation of market activity.
Regulation post-2008 is not the issue above.
If you had bothered to report these figures:
Carter years from 1977 to 1980: 72,844 pages
Reagan: 54,335
Bush: 59, 527
Clinton: 71,590
George W. Bush: 75,526
So if you think that just citing the average page numbers of the Federal Register is a good measure of regulation, then that metric shows clear deregulation from 1980 down to the early 1990s. Them increasing again significantly from Clinton’s years.
But this metric is crude and not reliable.
Even Cato admits this:
“It’s true that when governments deregulate, they must announce those changes in the Federal Register, too, and so some of the pages represent genuine deregulation. … Of course, the number of pages in the Federal Register is a crude measure of regulation. “
See the link below.
“Regulation post-2008 is not the issue above.”
Regulation post 1970 is.
It has increased.
“Them increasing again significantly from Clinton’s years.”
Right, regulation has increased during the time period you claim there has been deregulation.
What does “even Cato admits” mean?
That Cato is pro-capitalism? Hahaha, that’s funny.
Also not all those actual regulations were economic ones:
One could argue that we need to distinguish here between different kinds of regulation. Often people refer to “economic regulation” when they mean restrictions on whether new firms can enter businesses or that require firms to get government permission before setting their prices. If this is what they mean, then there is a case to be made that, in substantial sectors of the economy, there is less government regulation now than before the late 1970s. There has been substantial deregulation at the federal level of airlines, trucking, railroads, oil, and natural gas, to name five large sectors
The stupidity of just citing average page numbers in the federal register as some proof of the extent of economic regulation is very clear.
In economic terms, the 1940s, 1950s and 1960s had a higher degree of industry and labour regulation than post-1980 period.
MF excels in ignorance.
Also,
“The Federal Register is the main source for the U.S. federal government agencies’:
Proposed new rules and regulations
Final rules
Changes to existing rules
Notices of meetings and adjudicatory proceedings
In other words, this publication also contains “Proposed new rules ” (which may never be passed) and other material not even related to regulation at all.
A lot of it is not necessarily even economic.
“Also not all those actual regulations were economic ones:”
All regulations affect the economy, LK.
As Mises explained, economics encompasses the entirety of human action. Human action IS economizing.
As CATO says, the Register also describes deregulation, so your argument is doubly stupid.
You have to demonstrate how the Register increased under Clinton and Bush II and in what areas.
“You have to demonstrate how the Register increased under Clinton and Bush II and in what areas.”
I don’t see why. Economic distortions build up and persist for longer than a term or two of Presidential time periods.
Except of course the closing of the gold window in 1971… This event has of course nothing to do with the “bubbles have increased considerably since 1970” statement.
Just a coincidence.
“There’s been considerable deregulation of markets, privatisation, […] since the 1970s.”
LOL. The mayor of New York City apparently has the authority and the gall to regulate what size sodas consumers can buy in “his city”, but the markets are deregulated?! You realize the market consists of more than just financial instruments, right?
As for privatization, I am yet to hear of any real privatization. Contracting is not privatization, especially under the government’s ridiculous rules for that.
Couldn’t the correlation be between the globalization of manufacturing, technology, and labour markets only available in the US from 46 into the 60’s, and greater US economic instability?
The world economy is somewhat different now than in 1946. I hate to be a Krugman here, but starting your test period with the destruction of a significant fraction of the non-US world’s manufacturing base and labour force seems questionable.
Dear Lord Keynes,
The tax structure is motivating people to throw good money after bad. I agree, deregulation appears to be the problem however it is not. The problem is Fed money and tax structure that creates moral hazard.
IF people did not get led around by the tax carrot and have the false impression their money was safe, deregulation would work better.
Few people would send resources to a bad place.
LK
I DON’t agree with Mises
🙂
You don’t agree that humans act?
“That’s garbage.”
That’s not an argument.
Edward:
“MF, you are utterly clueless as always.”
Wouldn’t this imply you have shown that a first time?
“In the fiat system, there will always be recessions”
So let’s insist on recessions because fiat money is a force of nature.
It’s intertesting how socialist/statist/monopolist/centralization minds think, even after being advised how it’s wrong over and over again. The idea that certain actions and choices (socialistic ones) are inevitable, as inexorable laws of nature, as necessary, is not only self-contradictory, but tends to be communicated by its proponents with such vanity and arrogance, as if you people have a deep mystical insight into the inner essence of things that regular mortals cannot grasp.
The notion that recessions are inevitable in a fiat system, is not the same thing as saying that fiat money systems themselves are inevitable. Those who find comfort in making predictions based on a likely future of continued Fed intervention, cannot refute the anti-Fed guys by insisting that the Fed *will* do this or that in the future. We’re talking about people who make choices, who learn, in unpredictable ways.
It’s almost as if you feel safer knowing there is going to be certain violence, and so you imagine certain violence, than not knowing if there is or isn’t going to be violence, and so you attack or try to refute those who imagine an eradication of such violence.
“Who is to say that, (according to your reasoning at least!) we can periodically have mild “corrections” to stop inflationary pressures, and then resume growth after NGDP has stabilized?”
Don’t you mean who is to say we “can’t”?
I am someone who is to say we can’t, because NGDP stabilization is not how economies grow or how individuals coordinate their activities in a division of labor. Indeed, anti-market activity designed to counter-act market derived deviations in local spending are detrimental to individuals (while benefiting some in the short run at the expense of others), with everyone losing in the long run.
“It’s like the flaw in the arguments of Mises, Rothbard, and Ayn Ran, who say that a mixed economy cannot endure, it must either turn one way or another. Ummm, no. A mixed economy can endure, like a see-saw, tending one way for a generation, then flipping back another way. This can continue indefinitely.”
This is not a positivist-empiricist proposition. It is a priori to experience, because we need an infinite amount of time to collect that data to “test” it.
Didn’t you claim, repeatedly, that non-positivist empiricist thinking is not “real science”? Your claim here is not even capable of being empirically tested, because it requires an infinite amount of time and data.
The argument that mixed economies can endure forever is not something that you can prove by simply name dropping a bunch of those who may or may not disagree with it, and then assert that they are wrong. You’re going to have to do a lot better than that.
“your logic is sloppy, your conclusions are unsound, and your mind is closed. Because you won’t subject yourself to a falsifiability tests, (even theoretically?”
Did anyone else see the irony in this statement?
Edward claims, a priori, before we collect the required data that would falsify it, that societies can be mixed forever. And yet, he’s deriding me for not subjecting myself to falsifiability tests.
I chuckled.
Your logic is so unsound Edward, that you don’t even know what you’re even arguing.
“Apodictic certainty my a**!) you will never learn, or grow or understand new things. Such is the life of the faith based fanatic.”
The irony deepens.
And misuse the idea of opportunity cost, stretching it way too far as to almost become meaningless,
What “misuse”?
Ed, have you learned what inflation is yet? I tried to lead you to it by quoting the father of the school of economics you profess to belong to, but it must have went over your head.
At least you admit that inflation will always exist as long as you and your statist pals insists of using fiat currencies. I wonder why you insist that all of us have to use fiat currency if this is true, though.
I also doubt you understand anything Rothbard or Mises has written. At least there is no evidence in here that you have.
“economic calculation” this, “economic calculation that,’
(face palm)
What an excellent, substantive and on point refutation of the essential Austrian concept of economic calculation. All the other statists, Keynesians and monetarists attempt to “define” it out of existence and pretend it does not really exist. But not the brave “Edward”.
I don’t need to disprove such a trivially true concept. It’s like other Austrians saying: “disprove the statement, man acts” you can’t.. Because it leads to a contradiction.
Such a deep and profound insight though (lol) man acts, just like economic calculation.
“I don’t need to disprove such a trivially true concept.”
Translation: I don’t need to understand what is not a trivially true concept but I will call it such so as to declare ignorance a virtue.
I personally never liked the statement “man acts” because it is poorly defined. What counts as an action? Is a stone rolling down a hill an action or a reaction to gravity?
I think it is better to say that humans are goal seeking, and responsive to their environment, and adaptive.
Physical systems tend to seek a state of low energy and high entropy, but humans create local regions of the reverse — high energy and low entropy. All living things do this, humans just have more elaborate schemes for it, which makes us fundamentally different to the stone rolling down the hill.
Humans also actively gather information and process it. The fact that any sort of calculation is possible (or decision making if you prefer) is in itself pretty amazing. Doubly so when you try to get to the nitty gritty of what information processing really is and how it works. Humans can judge a situation, which is why computers consistently lose at poker, despite the computer having access to much better probability statistics.
Tel,
Have you ever read Human Action?
Your first question, “Is a stone rolling down a hill action?”, is directly anticipated and responded to by Mises in the relevant introductory passage to the book.
I’m not trying to be condescending. I am not sure how you could have this beef if you read it. Here is the link to what I am talking about: http://mises.org/humanaction/chap1sec1.asp
Rocks have no “purpose” rolling down hills so this couldn’t be constituted as “action” in the praxeological sense Mises is talking about.
I must admit I keep getting bogged on the first chapter of Human Action, because I just don’t agree with his approach.
How do you know the rock has no purpose? How did you go about asking it?
It’s a serious question, the rock is quite persistent in its behaviour. What actual measurement would you use to measure “purpose”?
Human Action talks about “the power of will” but show me some will power. Take a photo of will power, or put it in a bottle, or weigh it, or do anything with it. You end up with intangible souls and the hand of God and stuff… you can’t measure those either.
Tel,
Not sure what you’re trying to do here. Are you not able to see the difference between a rock moving down a hill propelled by gravity, and a human being getting a job to make some money?
Do those seem like pretty similar situations?
If so, I’d suggest your confusion requires diving into the epistemological and metaphysical pools of philosophy, rather than having anything to do with imprecision with Mises’s definitions.
In other words, do you think economic analysis is coherent when applied to rocks?
As I already said, I think the difference is better explained in terms of entropy, because at least it is measurable.
Humans create localized regions of low entropy. Rocks don’t do that.
Tel,
Are you trying to equate economic phenomena to physical phenomena and draw an analogy?
Are you uncomfortable with the terms employed because you think it implies some metaphysical state you disagree with?
I am having a hard time understanding what your preferred terminology adds to our understanding of economic issues.
Your original point was “I don’t like ‘human action’ because what action is seems poorly defined.” Then you gave an example that would not be part of Mises definition of “action” and asked if it was “action” as Mises meant it.
It clearly is not. I would think this would help resolve your fears and confusion. But instead you press on with something about entropy. I can’t tell if you were actually trying to understand Mises definition, or if the whole time your intent was to make your own point.
With a background in physics and engineering I believe that all phenomena must be physical. Sometimes looking at the physical details in a very fine grain way can miss the wood for the trees, but never the less the wood must contain trees, else there is no wood at all.
The problem is that if you cannot make a physical measurement of any sort that detects the thing you are looking for, then you have to ask yourself whether it exists.
Neither you, nor Mises gets around to explaining how to measure “will power” or any fundamental principle of human action beyond, “it is what it is and that’s all there is to it”. I do accept that there are lots of things we don’t understand, but if you want to understand something the first step must be to take a measurement and demonstrate that at least there is something to study here.
Of course, if I imagine a house, it is not a real house. I cannot live in it. Never the less, the idea must reside somewhere, in a physical condition. Thus, we could say that a person who understands houses is physically different from some other person who has never seen one. That’s a difficult thing to measure I admit, but Mises never even proposes a way to objectively and systematically distinguish between a human and a rock. All you get is an assertion that humans act and rocks don’t, but that’s not useful for anything. I want an actual methodology, not just an assertion.
Tel,
Right, so, you don’t actually confuse what things do and don’t count as action according to MISES’S definition– you don’t like the way Mises defines things. Because I think according to Mises definition, it’s pretty clear whether a rock “acts” or not.
But your dispute goes beyond that– you don’t think Mises definitions themselves are useful. That’s a whole different matter. I don’t know what you think the solution is to this and at this point I’m not entirely convinced there needs to be one. This could be a problem-that-isn’t-a-problem and stems more from your belief that everything should fit into your physics-box, rather than it being concerned with “reality as it exists.”
Tel,
How do you “do math”? Where does math exist? Is there anything wrong with math methodology? Where is math located? Etc.
I seem to be missing your great insight.
Tel,
Final comment before signing off on this:
I think it confuses the issue, rather than adds clarity, when you insist on defining things in terms of physics because “everything is happening in a physical system”. Why have economics? Why have biology? Chemistry? Psychology? Etc.? It’s all physics, so why create these special disciplines?
The best response I can come up with at the moment is, “Because asking ‘Why did that price go up?’ isn’t coherently answered by, ‘Because a bunch of atoms collided with each other in a particular pattern that led to that price going up as the outcome.'”
I don’t think there is any objective reason here why something must be physically measurable to be coherent, meaningful, existant, etc., in terms of explaining and understanding economic phenomena. I think that is a particular (peculiar?) preference you bring to the table that you insist everyone satisfy for your amusement.
Entropy is increasing or decreasing. Okay. What can you predict from that knowledge? What can you say about economic events by unmasking the physical truths underlying it?
Tel:
“Neither you, nor Mises gets around to explaining how to measure “will power” or any fundamental principle of human action beyond, “it is what it is and that’s all there is to it”. I do accept that there are lots of things we don’t understand, but if you want to understand something the first step must be to take a measurement and demonstrate that at least there is something to study here.”
Can a measurement measure itself?
If you think that measuring objects is the only method by which all “real” empirical knowledge comes from, then what of that statement itself?
Is the statement “Measuring objects is the only method by which all “real” empirical knowledge comes from” a statement that was itself a a measurement by someone or something prior?
Suppose I said “God exists”, and I justified this by saying that this statement itself is from God, so it must be true.
Would I be doing something other than begging the question here?
If not, how is your statement any different? If you are going to justify the proposition that the only true knowledge comes from that which is measured, you can’t appeal to measurement itself as a premise, lest you beg the question.
“What counts as an action?”
Teleological phenomena. All other phenomena are causal.
Yes, “action” can be regarded as somewhat inexact, since the word is used in ways other than goal seeking behavior, such as “active volcano”, “geological activity”, and so on.
Goal seeking can reasonably be regarded as superior as an heuristic.
I’m glad you took the time to say “local regions” in “local regions of the reverse”. Any seeming reduction of entropy is always local and has the “cost”, for lack of a better term, of increased entropy outside the locality, with a net increase in entropy qua entropy in the universe. It was a valuable lesson that I learned.
Translation: I don’t understand it. I have a psychological interest in not attempting to understand it. I dislike it because it doesn’t presuppose statism. It makes me feel scared and powerless.
Edward said – “A mixed economy can endure, like a see-saw, tending one way for a generation, then flipping back another way. This can continue indefinitely.”
Indefinitely, really? Sounds like faith based fanaticism to me. Or maybe you have a real crystal ball and not one of those cheesy tourist trap imitation crystal balls.
I laughed because he can’t even see that the argument is not falsifiable, just before he ranted against me for daring to legitimize non-falsifiable reasoning.
Actually, in this particular case Edward’s statement is falsifiable for any particular economy. If the economy collapses, then his statement is demonstrated to be false. While ever the economy doesn’t collapse, his statement might be true (provisionally), but cannot be proven.
Mind you, we might want to get some metrics in place to decide how bad things have to get before we can officially call it a “collapse”.
But that has occurred many times already, Tel. I don’t think Edward, ignorant as he is, is so ignorant that he isn’t aware of these examples throughout history.
I think he means something else.
Ahhh, but each new economy is a bit different to the last one. So presuming he is talking about the current economy right now, it has not collapsed (yet).
The argument that in mixed economies, where government is the solution to problems, socialism is the only outcome, is not country or economy specific.
You could take the Hoppeian view and call all state interventions socialism. Other than the nations that were already fully socialist, pretty much all mixed economies in the west are far more socialist than they were in the past.
One could do that, but then it wouldn’t be the kind of socialism being referred to as the end game in this particular dispute.
The argument that mixed economies tend towards socialism would be rather trite if we defined all intervention as socialism. For the argument would then be reduced to: “All socialist economies tend towards socialism.”
Why don’t you go ” calculate” in a factory somewhere Roddis, so u won’t bother us.
Just so everyone else can hunker down in preparation, are you guys going to have the exact same argument yet again on this thread? Are you shooting for 300 comments this time?
Do they not always? It’s just like kids arguing with each other.
Sorry Bob,
You know the term “hippie punching?” I get a kick outta religious fanatic punching. Especially religious fanatics who are (unlike u bob, who seems like a nice guy) rude and intolerant as hell like Roddis and MF and “razer”
Edward, I would not be rude to you, if you only stopped being rude to me.
I’ve found Bob Roddis to generally address the topic at hand, rather than abuse the person. He also explains his points, answers reasonable questions, and often provides references.
I know he tends to get abusive toward “Lord Keynes” which is a long standing grudge thing… pointless but they are both grown ups, they know what they are doing.
In your case Edward, you regularly evade the issues. You aren’t punching anything but air and straw, and if you get a kick out of convincing yourself you are a winner then I guess you are free to delude yourself any way you like.
Hey, I have one post here today. I’ve been out hiking in the woods luxuriating in the cold cold rain that was caused by Global Warming.
All the same, I think directly engaging the deceptions and obfuscations of LK and “Edward” are very productive.
Sounds like a rhetorical question to me.
Dyspeptic, really? You are going to try and deny that the American economy went through a period of more interventionism up until the neoliberal period starting with Reagan, than more again?
The size of the Federal Register has increased since the early 1980s.
There has been no overall deregulation.
There has been some deregulation here, but lots and LOTS of regulation everywhere else.
I think that total US government tax rake as percent of GDP has been approximately stable. However, total US government debt as a percentage of GDP (that is real debt, including Social Security, pensions, and all entitlements) has steadily trended upwards. Spending has also trended upwards.
Ronald Regan admitted afterwards that although he intended to reduce the size of government, he was unsuccessful in that aim.
What does “neoliberal” mean anyhow? What does “liberal” mean for that matter?
“I think that total US government tax rake as percent of GDP has been approximately stable.”
Not sure if stability vis a vis GDP is a valid metric. Why should the state grow just because twice as many computers were manufactured this year as compared to last year?
“However, total US government debt as a percentage of GDP (that is real debt, including Social Security, pensions, and all entitlements) has steadily trended upwards. Spending has also trended upwards.”
The obligations are mathematically impossible to make good, without substantial inflation or outright defaults.
“Ronald Regan admitted afterwards that although he intended to reduce the size of government, he was unsuccessful in that aim.”
Shhh, statist liberals need the image of Reagan as a deregulator and spending hawk so that they can blame today’s problems on that.
“What does “neoliberal” mean anyhow? What does “liberal” mean for that matter?”
Neo-liberalism, as used by it’s detractors, is just another word for laissez-faire capitalism (which has been reduced, not expanded, contrary to the claim by those who use the term pejoratively).
its
Is this a Monty Python’s Flying Circus reference?
Good thing that legally speaking those obligations are voluntary, so they can be kept off the books. Unfortunately, even default on a voluntary debt will eventually entail someone standing up and telling people they got burnt. That ain’t gonna be fun.
To quote, “He who smiles when things go wrong, has thought of someone to blame it on.”
Personally, I blame Keynes, but I’m sure as the blame game progresses, everyone will have a go at pointing to everyone else.
Thus, largely unrelated to the way the same people use the word “liberal” ?
Not quite:
The Federal Register, which lists new regulations, averaged 72,844 pages annually during the Carter years from 1977 to 1980. … Then the average fell to 54,335 during the Reagan years, rose to 59, 527 during the Bush I years, to 71,590 during the Clinton years, and, finally, to a record 75,526 during the administration of that great believer in laissez-faire, George W. Bush.
http://www.cato.org/policy-report/novemberdecember-2008/are-we-ailing-too-much-deregulation
So:
Carter years from 1977 to 1980: 72,844 pages
Reagan: 54,335
Bush: 59, 527
Clinton: 71,590
George W. Bush: 75,526
So if you think that just citing the average page numbers of the Federal Register is a good measure of regulation, then that metric shows clear deregulation from 1980 down to the early 1990s. Them increasing again significantly from Clinton’s years.
But the metric is crude and not reliable.
Even Cato admits this:
“It’s true that when governments deregulate, they must announce those changes in the Federal Register, too, and so some of the pages represent genuine deregulation. … Of course, the number of pages in the Federal Register is a crude measure of regulation. “
http://www.cato.org/policy-report/novemberdecember-2008/are-we-ailing-too-much-deregulation
Also not all those actual regulations were economic ones:
One could argue that we need to distinguish here between different kinds of regulation. Often people refer to “economic regulation” when they mean restrictions on whether new firms can enter businesses or that require firms to get government permission before setting their prices. If this is what they mean, then there is a case to be made that, in substantial sectors of the economy, there is less government regulation now than before the late 1970s. There has been substantial deregulation at the federal level of airlines, trucking, railroads, oil, and natural gas, to name five large sectors
MF shoots himself in the foot and shows his ignorance yet again.
Wonderful job, Lord Eugenics. Now, other than those you cited above, please cite the deregulations during Reagan’s tenure that were economic ones.
People may not notice it but I generally do not debate LK and Keynesians on minutiae like this. Applying the term “deregulation” and/or “unconstrained capitalism” to a government cartelized funny money machine like the banking system is just the typical destruction of the language by the statists.
I made an mp3 of the following marvelous video presentation staring Mike Norman. I actually listened to 80 minutes of it in the car today (which amounted to 80 minutes of mangling those concepts). Did you know that there is just an unbelievable amount of fraud under our current unregulated laissez faire form of unconstrained financial capitalism?
http://mikenormaneconomics.blogspot.com/2013/05/my-talk-at-columbia-law-school.html
Mike Norman’s cringe-inducing speech asserted that the free market types and Randians he encounters do not understand that there needs to be laws against things like murder, or else you will have a jungle. Have I ever mentioned that no statist understands the NAP?
” If this is what they mean, then there is a case to be made that, in substantial sectors of the economy, there is less government regulation now than before the late 1970s.”
That isn’t what I mean, because I am not talking about specific industries. I am talking about the total amount of regulations.
Those have gone up, contrary to the claim by statists that deregulation has gone up.
Apparently, the next event as part of these “Modern Money and Public Purpose” seminars is the Mosler/Murphy debate.
http://www.modernmoneyandpublicpurpose.com/seminar-7-financial-reform.html
They have previously cut down a lot of trees wringing their hands about how the problems endemic in funny money show the need for even more regulation. By them.
Wrong link. Here’s the Mosler/Murphy link:
http://www.modernmoneyandpublicpurpose.com/mmt-vs-austrian-school.html
“The right complains I’m an inflationist, even though I’m actually an inflation hawk.”
Scott Sumner 5/27/13
I’m the King of Kashmir.
Oh Bob! You do make me chuckle. Putting little me in such august company!
Have you ever heard (I’m sure you have) sayings like:
“The best cure for high prices is high prices”?
“The best cure for high profits is high profits”?
Maybe you have even heard Austrians saying them. There is a sort of Austrian flavour to those paradoxes. (Maybe it was an Austrian who invented them??)
Take another analogy: suppose I am balancing a pole upright on the palm of my hand. And suppose I want to move my hand north, without the pole falling over. First I need to move my hand south. So when the pole starts to lean north, I can now move my hand north too.
Actually, MF, I am totally on-board with your first comment above (though it is perhaps a little overly flattering of me). But it does duck one very big question: When you say “They should understand how one’s efforts to make more money are only beneficial to themselves and others if their real activity is regulated by an eff[i]cient monetary order, …..” you are totally right. But that raises the very big question: what does an *efficient monetary order* mean, and what would it look like?
I don’t know the answer to that question, even though it is precisely that question that I want to answer. But as far as I can figure out, a monetary order in which the Bank of Canada raised interest rates now would be even less “efficient” than the alternative.
The best I can come up with so far is that some sort of NGDP target would be a reasonable approximation to some sort of efficient monetary order.
Yes I’ve heard statements like that, Nick. I get it, I get it: If you’re right, then your (intentionally) paradoxical statement is cute and pithy. But if I’m right, then it’s nutty. So I guess it boils down to: you think your idea is sensible, I don’t.
Nick, I think your paradox can perfectly be reversed to express the Austrian position with a paradox that will probably sound stupid to you (and for sure to LK, Krugman etc..) too:
“Guys if you really fear recessions, then stop preventing them from happening.”
skylien: it doesn’t sound stupid to me.
I can perfectly well imagine an unsustainable boom that is caused by monetary policy being too loose, and the only way to keep the boom going is to make monetary policy looser and looser, and for which the only cure is to stop monetary policy being too loose, and when monetary policy stops being too loose the boom ends, and the sooner monetary policy stops being too loose the better.
But how do we tell the difference between that case, and a different case in which monetary policy is not too loose, and the economy is growing sustainably, and then monetary policy suddenly becomes too tight?
Nick, fair enough. That is why I said “probably” when I referred to you.
It really is good to hear that from you. It seems other people who are called “economists” as well seem not to worry about that at all. For them only GDP (and other aggregates) counts. They are not really worried that those are necessarily sums of (figuratively and literally 😉 apples and oranges.
I would frame the question a bit different: How can you tell if the structure of production/debt/prices/interest rates is in accordance with the aggregated ever changing individual value scales (aggregated demand and supply schedules) of all market participants, or say is moving towards being a mirror of it rather than moving away from it?
And well I think it is obvious that it is impossible to “know” that and then intervene via government and central bank with targeted measures to do something better than the pricing mechanism of the market would do itself. If that would be possible I think a planned economy was feasible in general.
Since I think that is impossible to know and you seem to not have the answer for this as well, why not give the job of “determining” monetary policy the market? Are there decisive arguments that a market is not capable of doing it at all, or that it on the average gets it more wrong than a CB? How can you determine that if you cannot even answer the question you asked above yourself in the first place?
Who has the burden of prove in your view? Those who argue the market “naturally” should be in charge of monetary policy, or those who argue people chosen by some arbitrary political procedure should be?
I always forget about the moving smileys in this blog..
sklien:
” It seems other people who are called “economists” as well seem not to worry about that at all.”
I don’t think that’s correct. Take, for example, any very mainstream New Keynesian model. In such a model, booms are (very roughly speaking) as likely as recessions. And even if booms are (while they last) “good times”, they cannot last, and booms are not as good as recessions are bad, so an “efficient” monetary policy that could eliminate both booms and recessions would be a good thing.
There are two answers to your question, about leaving monetary policy to the market:
1. we live in a world where the government produces money. So we can’t duck the question: what should the government do? Should it produce a constant amount of money, a constant price of gold, a constant inflation rate, a constant NGDP growth rate, or what?
2. If the government did get out of the money-producing business altogether, what would happen? Would be see a competitive monetary system? Or would we see a natural monopoly? Personally, I lean towards the natural monopoly theory. Because each person wants to use the same sort of money that everyone else is using, just like Menger said. And it is not obvious to me that the quantity of X produced by a natural monopoly will be the optimum quantity, whether X is money or not.
“Personally, I lean towards the natural monopoly theory. Because each person wants to use the same sort of money that everyone else is using, just like Menger said. And it is not obvious to me that the quantity of X produced by a natural monopoly will be the optimum quantity, whether X is money or not.”
>> Nick, could you elaborate on this? What is the problem with people tending toward a single money? It seems to me it’s not much different than people tending toward refined oil as a primary energy source for transportation. But that doesn’t mean that there isn’t competition in manufacturing, distribution, and retail of that single good, just as there could be competitive production/distribution of a particular form of money.
Mike T:
If the different monies all had fixed exchange rates with each other, then they aren’t really different in the sense of creating different monetary policies. Just like if Canada had fixed exchange rates with the US, then Canadian monetary policy would be set by the US Fed. Or just like if the Bank of Montreal fixes the exchange rate of its money to the Bank of Canada’s money (which is what happens) that doesn’t mean we have true competition between different monies in Canada.
But if everyone else around me uses a money that is pegged to the Bank of Canada money, then I will want to use a money that is pegged to the Bank of Canada dollar.
There are private moneys in Canada that are not pegged to the Bank of Canada money. Things like LETS (mostly run by lefties). We can use them if we want. But hardly anybody ever does.
“Things like LETS (mostly run by lefties). We can use them if we want. But hardly anybody ever does.”
That’s because the Canada Revenue Agency doesn’t demand them for taxes, nor do the courts demand guilty defendants pay in them.
Private money in a context of central banking, legal tender, and taxation laws, is kind of like the state saying “Yes, you can set up private police if you want, but you’ll still have to pay for our police and obey our laws.”
Nick,
I am not sure in how far this has something to do with a kind of fetish they have for GDP numbers that are supposed to develop in a certain way (close the output gap), no matter how this is achieved (fake alien invasions would do).
However I do think there can be real booms (low unemployment, increasing wealth) that do not turn into a bust. Booms started via the so called “wealth effect” (which the FED openly admits it tries to start) cannot last obviously. How could they?
“And it is not obvious to me that the quantity of X produced by a natural monopoly will be the optimum quantity, whether X is money or not.”
The question to this is if a certain change in quantity in either direction really can be beneficial at all, which I don’t think.
And even if you could never determine what was the right change in quantity as you admit. If you only can be wrong, why not at least give the market the security of the natural changes that are much better predictable than moody CB chairmen and changing trends in mainstream economic thinking. I do think that one thing a market needs, is predictability. I really don’t see that now. Anything can happen. Bernanke seems to be intentionally playing expectations in both directions by hinting at further easing and tapering at the same time… I doubt that this will induce lasting investments. (What it prevents however is a strong market reaction until he leaves the boat).
Anyway thanks for your answer.
“But that raises the very big question: what does an *efficient monetary order* mean, and what would it look like?”
What would an efficient computer or car or food industry look like? What would be the ethics presupposed (i.e. what people can and cannot do)?
“But as far as I can figure out, a monetary order in which the Bank of Canada raised interest rates now would be even less “efficient” than the alternative.”
Even if the artificially low interest rates today are bringing about malinvestment where corrections are *inevitable* at some point, if not sooner and smaller, then later and more pronounced?
“The best I can come up with so far is that some sort of NGDP target would be a reasonable approximation to some sort of efficient monetary order.”
Not trying to be glib here, but do you think that NGDP targeting, not at the country/economy level, but at the individual state level, or city level, or neighborhood level, or household level, would enable real resources and labor to be allocated efficiently?
In a world market, shouldn’t NGDP at the country level fluctuate according to country to country world market forces, so that should a significant quantity of real resources and labor just so happen to be allocated poorly in one country, a general decline in spending is the only way, or at least the best way, that such investments can be exposed to actual losses, to ensure there are incentives to reallocate instead of postponing them through “domestic” inflation, which hits people in real terms, which is very difficult for most people to notice right away?
MF: “What would an efficient computer or car or food industry look like? What would be the ethics presupposed (i.e. what people can and cannot do)?”
See my responses to skylien and Mike T above.
Suppose the government were in the business of producing cars. Then I (or someone) would have to answer that question.
And suppose that the government made a profit at producing cars, and that a small number of private producers also made cars, and didn’t face any special taxes etc., but that 99% of people still seemed to choose government-produced cars. Then I (or someone) would still have to answer that question.
“Even if the artificially low interest rates today….”
How can you know they are artificially low? Maybe they are naturally low? Maybe they are unnaturally high, because the natural rate is low?
Or maybe (which is what I am arguing) unnaturally high interest rates (because the natural rate falls and the market rate doesn’t fall quickly enough) in turn cause the natural rate to fall. In other words, the natural rate depends on expected future NGDP growth, which in turn depends on whether the market rate is above or below the natural rate.
“Not trying to be glib here, but do you think that NGDP targeting, not at the country/economy level, but at the individual state level, or city level, or neighborhood level, or household level, would enable real resources and labor to be allocated efficiently?”
Good question. That is a different way of framing the “optimal currency area” question. If we take currency areas as given, then I would want NGDP targeting for that currency area, as being best for that currency area. But yes, I’m ducking the optimal currency are question, in giving that answer.
“Suppose the government were in the business of producing cars. Then I (or someone) would have to answer that question.”
Suppose we don’t presuppose any particular group of people producing cars.
Suppose we ask instead how can cars be produced efficiently? What should the relevant ethics be?
“And suppose that the government made a profit at producing cars, and that a small number of private producers also made cars, and didn’t face any special taxes etc., but that 99% of people still seemed to choose government-produced cars. Then I (or someone) would still have to answer that question.”
But you’ve already partially answered it. You’ve already answered that efficiently producing cars presupposes, at least, a monopoly on car production.
I don’t see why we can criticize North Korea and advocate for them to liberalize the car market there, but we can’t do the same thing for banking here.
“How can you know they are artificially low? Maybe they are naturally low? Maybe they are unnaturally high, because the natural rate is low?”
Well strictly speaking, I can’t know apodictically.
But I can use mosaic (economic) reasoning and process of elimination.
If natural rates are low, then we should have seen a rise in investment versus consumption ratio, i.e. rise in savings ratio. But savings are down.
I know that interest rates are determined by profit rates. Higher profits put upward pressure on interest rates. Yet profits are up and interest rates are down.
But ultimately, we cannot know for sure whether interest rates are lower than their free market rates, but then the question you asked me, applies to you too. How can you know interest rates are *not* artificially low?
Of course, the only way to know this is via the market process. But we don’t have a market in interest rates, so we also cannot say that low interest rates are caused by a weak economy or by declines in natural rates.
So we’re stuck until we actually have a market in interest rates.
“Or maybe (which is what I am arguing) unnaturally high interest rates (because the natural rate falls and the market rate doesn’t fall quickly enough) in turn cause the natural rate to fall.”
How can “(because the natural interest rate falls…)” be reconciled with “in turn cause the natural rate to fall.”
It looks like you’re setting up the scenario where the natural rate falls (which means due to natural causes such as increase in savings versus consumption ratios), but then because “market” rates don’t catch up, this is allegedly the cause for the natural rate to fall.
What is causing the natural rate to fall here? The initial fall that is, um, natural, or the fall that is caused by the “market” rate not falling due to Fed inflation?
“In other words, the natural rate depends on expected future NGDP growth, which in turn depends on whether the market rate is above or below the natural rate.”
I don’t see how this follows. No borrowers or lenders, as far as I am aware, price their loan contracts by taking into account total spending in the whole economy. They take into account estimates of their own particular incomes and spending. So what if spending decreases or increases by $100 in NY? The guy in California isn’t going to suddenly be willing to pay less or more interest because of that.
Interest rates are not dependent on NGDP, they’re dependent on expected profit rates, which are in turn dependent on the difference between money expenditures and money incomes, not just total spending.
“Good question. That is a different way of framing the “optimal currency area” question. If we take currency areas as given, then I would want NGDP targeting for that currency area, as being best for that currency area. But yes, I’m ducking the optimal currency are question, in giving that answer.”
Is optimal currency area a question that only the market process can answer? How do you know your desire for NGDP targeting for the “given” currency areas, which were all determined by political force, not market forces, is superior to allowing NGDP to fluctuate country to country according to market forces?
MF: “If natural rates are low, then we should have seen a rise in investment versus consumption ratio, i.e. rise in savings ratio. But savings are down.’
In increase in desired saving would cause a fall in the natural rate and an increase in equilibrium investment.
But a decrease in desired investment would cause a fall in the natural rate and a fall in equilibrium investment.
“I don’t see how this follows.”
Suppose that people expect that monetary policy will get tighter next year, and cause a recession next year. So people think their income will be lower next year, and so increase their desired saving this year. And firms think it will be harder to sell goods next year, and so reduce their desired investment this year. So with an increase in desired saving and a fall in desired investment, both happening this year, the natural rate (that would equilibrate desired saving and investment) falls this year.
“In increase in desired saving would cause a fall in the natural rate and an increase in equilibrium investment.”
Yes, I agree.
“But a decrease in desired investment would cause a fall in the natural rate and a fall in equilibrium investment.”
I don’t agree with this. If investment decreases, then, ceteris paribus, the difference between consumption spending and investment spending rises, which increases profits, which you can either view as a rise in the natural rate itself (as Mises did), or you can see the rise in the rates of profit to put upward pressure on interest rates “naturally”, i.e. natural interest rates rise.
I don’t see how a fall in investment is associated with a decline in natural rates.
“Suppose that people expect that monetary policy will get tighter next year, and cause a recession next year. So people think their income will be lower next year, and so increase their desired saving this year. And firms think it will be harder to sell goods next year, and so reduce their desired investment this year. So with an increase in desired saving and a fall in desired investment, both happening this year, the natural rate (that would equilibrate desired saving and investment) falls this year.”
I understand the process you’re describing, but I think you’re missing some important phenomena in your example.
We have to take into account the fact that for “saving”, if you mean holding cash earnings for longer periods of time, we can’t assume that this increased cash holding time will come at the expense of consumption only.
An increase in cash preferences does not necessarily imply that the ratio between investment *spending* and consumption *spending* changes, in which case yes there would be a changed pressure on interest rates.
Natural interest rates are not determined by cash holding times. They are determined by the difference between spending on output, and spending on input. Natural interest is not the rate of interest on loans specifically. Natural interest is the difference in valuation between future goods and present goods, which manifests in interest rates on loans, but isn’t defined by it.
MF: “I don’t see how a fall in investment is associated with a decline in natural rates.”
Suppose somebody discovers a new process that can turn grape juice into wine instantly. In a standard Austrian model, that would reduce investment and reduce the natural rate of interest.
“Suppose somebody discovers a new process that can turn grape juice into wine instantly. In a standard Austrian model, that would reduce investment and reduce the natural rate of interest.”
In a standard Austrian “model”, the only activity that is associated with a decline in natural interest rates is a decline in the ratio between the valuation of future goods relative to present goods.
Natural interest rates falling is, in the Austrian “model”, the same thing as saying people are valuing present goods less highly relative to future goods, or, saying the same thing, people are valuing future goods more highly relative to present goods.
If someone discovers a new, more efficient method of producing wine, such that the old methods of producing wine are no longer competitive, this alone would not reduce natural interest rates. For the capital and labor that used to be used to produce win the old way, can be reallocated to produce something else instead that could not be produced because the resources and labor were tied up in producing win the old way.
Investment as such does not necessarily fall.
And even if investment did fall, then ceteris paribus this would imply an *increase* in the valuation of present goods vis a vis future goods, as manifested in investment spending versus consumption spending.
Dollar-wise, if investment spending falls, then, ceteris paribus, that would widen the gap between investment spending and total spending on capital and consumer goods. This would increase profits and put upward pressure on “natural” interest rates.
I still don’t see how you’re getting a fall in natural interest rates on the basis of declining investment.
If you mean to say that a decline in investment spending will, ceteris paribus, result in a decline to total spending, which reduces profitability, and puts downward pressure on interest rates, then yes, I can accept that, but this is only a short run phenomena. It is a transition.
The underlying force behind reduced investment spending will eventually reduce business costs of production, and once the costs fall, then profits will rise, and interest rates will reflect the prevailing new time preferences (which are higher).
Basically what you’re saying is that if cash holding times increase, then, ceteris paribus, it would decrease nominal profitability in the short run, because while revenues fall instantly, costs fall with a time lag, as they are reflections of past spending that show up as costs in the present.
Well, sure. But then how does arbitrarily increasing the spending on “something”, such that total spending rises back up, benefit us? If spending on wine in California falls, how does an increase in spending on houses in Phoenix a benefit?
+1
MF:
Suppose someone invents a new process that coverts grape juice into wine instantly, rather than waiting one year.
The production and consumption of wine increases this year, and so the Marginal Utility of wine falls this year, so (at the margin) people place a lower value on present wine relative to future wine, which means the natural rate of interest has fallen.
Putting grape juice into barrels *is* investment. Grape juice sitting in barrels *is* (part of) the capital stock. (It’s the time-structure of production). So investment falls, when they are no longer putting grape juice in barrels to convert it into good wine.
This is standard Austrian Capital Theory. Our host, who is very good on capital theory (I don’t need to add the word Austrian) will be able to tell you more.
Or you could look at my old post here: http://worthwhile.typepad.com/worthwhile_canadian_initi/2012/12/capital-in-the-steady-state.html
“The production and consumption of wine increases this year, and so the Marginal Utility of wine falls this year, so (at the margin) people place a lower value on present wine relative to future wine, which means the natural rate of interest has fallen.”
Nick, I notice you keep repeating yourself, but I find it difficult to accept how this constitutes engaging my counter-arguments, as I am engaging yours.
As I noted before, it does not follow from people valuing a particular good, say wine, lower on present consumption versus future consumption. If people value wine in the present more highly, then this alone is insufficient for natural interest rates to fall.
In order for natural interest rates to fall, we have to have individuals placing lower value on present goods *as such* relative to future goods *as such*. We observe this through their investment spending versus consumption spending ratio.
A person who spends less on present wine, because it is more abudant due to productive innovations, relative to future wine (because there is no need to take time to produce it as in your example), is not necessarily someone who has a higher or lower time preference for goods as such. The less money they spend on present wine, could very well be accompanied by more spending on some other present good, say fine cheeses.
An increase in productivity is not the causal factor in what determines interest rates, natural or nominal. The productivity theory of interest was soundly refuted by Austrians, the very people who you are claiming adhere to it.
“Putting grape juice into barrels *is* investment. Grape juice sitting in barrels *is* (part of) the capital stock. (It’s the time-structure of production). So investment falls, when they are no longer putting grape juice in barrels to convert it into good wine.”
Investment *as such* does not necessarily fall here. If fewer grapes are put into casks, then people can devote their time to putting X into Y instead, as investment.
An innovation and reduction in investment in one industry does not put any pressure on interest rates, nor does it imply a change to natural interest rates.
If an individual invests less in wine making, that does not mean you are entitled to say that this individual’s time preference has changed. You can only know such a thing by learning whether or not they are placing a different relative valuation on future goods versus present goods as such.
If every innovation was synonymous with a reduction in natural interest rates, then if we consider 1700s to 2013, natural interest rates should be -10000% or whatever. For as new labor saving innovations are made, there should be a reduction in interest rates.
But natural interest rates don’t fall from innovations alone. Nor do they fall from a reduction in investment either.
Natural interest rates only fall when an individual places less value on present goods as such relative to future goods as such.
“This is standard Austrian Capital Theory.”
Actually, what you’re describing is the productivity theory of interest, which Austrian theory explicitly rejects.
“Our host, who is very good on capital theory (I don’t need to add the word Austrian) will be able to tell you more.”
I am aware of Murphy’s theory of interest, and quite honestly I have some problems with it, but this is not something I think is good to get into here.
“Or you could look at my old post here:”
“http://worthwhile.typepad.com/worthwhile_canadian_initi/2012/12/capital-in-the-steady-state.html”
There is not one mention of money expenditures in your example, which makes your model impossible to explain real world interest rates, which are functions of money expenditures, namely, the difference between money expenditures on output of production, and money expenditures on factors of production.
The productivity of labor can double, or triple, or quadruple in real terms, and yet natural interest rates can be unchanged, so long as people continue to value future goods as such relative to present goods as such, in an unchanged manner.
You won’t be able to explain the phenomenon of interest in a division of labor, monetary economy by focusing only on apples and bananas and trying to find a productivity theory of interest.
Sorry, bad grammar:
“As I noted before, it does not follow from people valuing a particular good, say wine, lower on present consumption versus future consumption. If people value wine in the present more highly, then this alone is insufficient for natural interest rates to fall.”
Should read
“As I noted before, it does not follow from people valuing a particular good, say wine, lower on present consumption versus future consumption, that if people value wine in the present more highly, then this alone is insufficient for natural interest rates to fall.”
One last (desperate) try:
Suppose a change in technology caused apples to become more plentiful relative to bananas. We would expect the MU of apples to fall relative to bananas, and the relative price of apples to bananas to fall.
Suppose a change in technology caused current apples to become more plentiful relative to future apples. We would expect the MU of current apples to fall relative to future apples, and the relative price of current apples to future apples to fall.
Over to you Bob!
Over and out.
“Suppose a change in technology caused apples to become more plentiful relative to bananas. We would expect the MU of apples to fall relative to bananas, and the relative price of apples to bananas to fall.”
Agreed.
“Suppose a change in technology caused current apples to become more plentiful relative to future apples. We would expect the MU of current apples to fall relative to future apples, and the relative price of current apples to future apples to fall.”
Why would future apples be relatively less plentiful, given that the productivity of apples has gone up as such?
If Henry Ford innovates and find a way to produce more present cars per labor hour, why would this imply relatively fewer future cars?
I suppose you could argue that more present cars means that the particular resources that went into those present cars, cannot also be used to produce factories and machines (future cars), and as such, future cars are lower than they otherwise could have been.
But even here, it does not follow that future goods as such will be in lower supply absolutely, not even cars, because the increase in production of present cars, and lower prices of present cars, can allow for increased investment elsewhere, or more investment in cars, or even more spending on other present goods elsewhere, which raises the supply of other future goods, or other future goods plus future cars, such that the supply of future goods as such does not decline.
And still, your example is not taking into account money expenditures, which are necessary if we are going to explain money interest rates.
I still don’t see any necessary decline in natural interest rates in your example.
Agreed,
Nick
Why?
And MF, my proposition is falsifiable.
In fact, the whole proposition, started by Mises, Rothbard, and Ayn Rand, that interventions tend to accumulate, was an empirical one. Looking at Britain and Europe post WWII, it was hard NOT to see that connection.
That it could reverse itself was much harder to imagine at the time. But when M, R, and A.R. say that there are two fundamental alternatives, the free economy or complete socialism they are neglecting a third one, the mixed economy.
Whether or not the mixed economy is a good thing is a separate issue. I much prefer a freer economy, and LK prefers the mixed one. But there’s no question that the mixed one is possible, and that it can endure. We’ve had 70 years of it now.
The a priori (I hate that word!) or theoretical (much better…) reasoning behind it is that different generations have different ideological impulses. Interventionism can accelerate for a generation, and as the problems start to reveal, a backlash occurs, more liberal policies are adopted. After a generation the government makes a mistake, and the free market is blamed, and the people start to vote in interventionists again. Like a children’ see-saw, there are forces pushing on both ends.
MF,
You misuse opportunity cost this way,
Suppose I show you an economy with minimal government interference, but one with a Federal Reserve system, . So a boom is underway. Profits are growing, so businesses have nothing to complain about. Wages are growing too, above the cost of inflation. ,(let’s say a productivity boom helped) People on fixed incomes are receiving their social security and pension COLA’s. And if their paranoid goldbugs, they can buy gold.
A smart person will look at business and labor’s balance sheets, maybe the increased income is coming at the expense of increased saving, and more leverage. But wait, assets are growing while liabilities are stable and even diminishing? So that theory goes the window.
Finally, a perm.bear will throw up his hands and say, “maybe its efficiency” So he takes a look at business’s free cash profit margins net as a percentage of their revenue after everything, taxes, depreciation, labor. If those margins are falling, that means businesses are growing with diminishing returns, that every new dollar of profit comes at a greater and greater cost.
But that is not the case
Lo and behold, profit margins, averaged across thee economy are stable.
After all this, you, MF, would say that there is still “distortion”? That those projects are still “unsustainable” HOW???! All the indicator: income, productivity balance sheets, profit margins are stable. “Because resources, that might have gone into different lines of production, were distorted by the Fed’s manipulation”
In a very general sense, that’s true.
But ultimately useless
You’ve made opportunity cost, and counterfactual reasoning into so broad a category as to be almost meaningless. You can never be wrong. It’s like me speculating on where we would be now if the industrial revolution had occurred in ancient rome, rather than GB in the 1700-1800’s. its fun but ultimately a pointless exercise, until we invent a time machine
Tell the skeptics WHERE those resources might have gone, then you might have more people become rothbardians.
Oh and its priceless, you taking on an indignant tone, when it comes to rudeness. You’ve been the master of it at the money illusion.com for some time, (and still are, if my suspicions are correct). i’m not the one who came swaggering (cyber-metaphorically speaking) into scott’s blog, itching for a fight, calling your ideological cousins (!) from the Chicago School statists, and insulting scott.
“But when M, R, and A.R. say that there are two fundamental alternatives, the free economy or complete socialism they are neglecting a third one, the mixed economy.”
You misunderstand their argument. They are not denying that a mixed economy can empirically exist at a given moment in time, subject to certain assumptions. They are saying that a mixed economy cannot last forever, and will eventually devolve into socialism. You could disagree with them, but you have not provided any arguments for why anyone should accept your theory and reject theirs.
“But there’s no question that the mixed one is possible, and that it can endure. We’ve had 70 years of it now.”
70 years is not the cut off date to falsify the argument that mixed economies eventually devolve into socialism.
In case you haven’t been paying attention, the mixed US economy for example is becoming more socialist over time. The trend is clear. We are being spied on more, we are being targeted more, we are being “regulated” more than ever. Most of the bills passed to law by Congress are laws that give the state more power, not less power or equal power. Accumulating these laws over time *is* a devolution to socialism.
“The a priori (I hate that word!) or theoretical (much better…) reasoning behind it is that different generations have different ideological impulses. Interventionism can accelerate for a generation, and as the problems start to reveal, a backlash occurs, more liberal policies are adopted.”
That only occurs if there is an existing prevalent ideology of liberalism among the populace. But such ideology is outweighed by statist ideology, as of this time.
“After a generation the government makes a mistake, and the free market is blamed, and the people start to vote in interventionists again. Like a children’ see-saw, there are forces pushing on both ends.”
Then why has the see sawed consistently in one direction only?
“Suppose I show you an economy with minimal government interference, but one with a Federal Reserve system, . So a boom is underway. Profits are growing, so businesses have nothing to complain about. Wages are growing too, above the cost of inflation. ,(let’s say a productivity boom helped) People on fixed incomes are receiving their social security and pension COLA’s. And if their paranoid goldbugs, they can buy gold.”
“A smart person will look at business and labor’s balance sheets, maybe the increased income is coming at the expense of increased saving, and more leverage. But wait, assets are growing while liabilities are stable and even diminishing? So that theory goes the window.”
How is this an explanation of how I “misused” opportunity costs? All you’re doing here is setting up an imaginary world that is conveniently consistent with your assumptions. You’re defining into existence stable liabilities. But in the real world of fiat money, whereby most of the new money enters the economy as credit, liabilities do not remain stable. They grow over time.
Having said that, actual book liabilities are not what is even meant by opportunity costs. It’s related for sure, but it’s not quite it. Opportunity costs are not actually the money spent that show up as liabilities on balance sheets. Opportunity costs are actually all the foregone choices and actions that did not empirically take place, by virtue of the choices and actions actually taken which make all other choices and actions impossible at that time. We can’t do everything at once. We can only do things sequentially over time. The opportunity costs are those foregone alternatives, not the liability obligations on balance sheets.
So how did I “misuse” opportunity costs again? I didn’t arbitrarily assume stable or declining liabilities in an imaginary world?
Inflation and government spending always imply a set of opportunity costs, but *these* costs are almost always ignored by the proponents of inflation and government spending (subject to whatever constraints). They tend to take the fact that inflation and government spending resulted in observable set of events (X,Y,Z), and they ignore the fact that these events made all other events impossible, *including events that are actually more valuable to the end consumer, but couldn’t take place because of what did take place by virtue of the inflation and government spending*.
Those who actually understand opportunity costs will not just look at “output” and “employment” statistics and conclude that inflation and government spending are not contrary to growth, or causes growth. They will think of the fact that there are alternative choices and actions foregone. They will ask themselves, OK, given that people could have made different choices and actions, how can we know if the choices and actions taken are indeed the most valuable to the end consumer?
“Finally, a perm.bear will throw up his hands and say, “maybe its efficiency” So he takes a look at business’s free cash profit margins net as a percentage of their revenue after everything, taxes, depreciation, labor. If those margins are falling, that means businesses are growing with diminishing returns, that every new dollar of profit comes at a greater and greater cost.”
First, that’s wrong. Not all bears think like that. Some bears consider not just nominal profit margins, but why it is that some profit margins decrease a lot faster than other profit margins, say industry to industry. They will consider relative prices, relative spending, relative profits. They won’t just consider a single firm in abtracto, and try to make sense of the whole economy by what takes place at the individual firm level.
You aren’t thinking of the *market process*. You’re only thinking of observable data, with a flawed theory that prevents you from even addressing the points being raised by Austrians and other coordination type schools.
You’re not dealing with opportunity costs here. You’re dealing with money costs of production. You’re not connecting this one firm to all other firms in a division of labor. You just thinking of dollars, and think dollars monopolize the solution.
“Lo and behold, profit margins, averaged across thee economy are stable.”
Imaginary world assumptions that aren’t connected to any argument, are worthless platitudes.
“After all this, you, MF, would say that there is still “distortion”?”
After all WHAT? You’re just imagining a series of events in your mind and demanding that my arguments of distortions in the real world, because they don’t apply to your imaginary world, don’t apply to the real world either?
“That those projects are still “unsustainable” HOW???!”
Did you know that the resources one firm requires to complete their plans, to the extent they don’t produce those resources themselves, depend on other firms to produce those resources for them?
Did you know that when inflation enters the economy, it does not affect the profits of all companies and industries equally?
Did you know that because inflation does not affect the profits of all companies and industries equally, there is brought about a change to *relative* production that when taken together as a puzzle, can result in some surpluses here, and some deficiencies there, given the actual desires of consumers, both cross sectionally and temporally?
Did you know that it does not follow from healthy nominal profits “for the average company”, doesn’t necessarily imply that their real activity are in coordination with each other, given that the price signal and spending signal changes due to inflation affect resource and labor allocation in ways that consumers do not prefer?
Suppose instead of me producing goods that consumers want in order for me to earn money, which of course requires my real activity to be in coordination with other individual’s real activity if my activity is to continue, I rather printed off $1 trillion in my basement, and the notes were indistinguishable from the existing supply.
Suppose I added these funds to the existing supply of loan money. Suppose interest rates changed, namely they went down.
Given that interest rates are lower, investors, to the extent that they borrow, would take those funds and start projects that were previously unprofitable due to too high of costs, but are now profitable because borrowing costs went down. Longer term projects are stimulated, because longer term projects are most sensitive to interest rate changes. The law of opportunity costs here, properly used, as opposed to not even used at all in your examples, enables us to know that because longer term projects are stimulated, it makes it impossible for those resources and labor to be made available for shorter term projects at this time.
Now, since longer term, more capital intensive projects were started, this of course requires a whole bunch of complimentary resources, in order to be completed. For example, if a project to start a mine is begun, it is going to need more than just what mines produce. It’s going to need a lot of resources that other companies produce, such as vehicles, oil, plastics, electrical parts, and so on. If those resources aren’t available, the mining project cannot be completed as planned.
But wait a minute, if the only reason the mining project was started was because I injected $1 trillion of new money into the loan market, and consumers are just going about their way, then consumers have not in fact “released” any new resources to make available to the mining company. Even if there are “idle resources”, the fact that consumers are not saving enough specific real resources sufficiently means that the mining project, the owners of which acted as if new real savings were made available, cannot be completed. Once the errors are realized, the owners lay off some of the workers, and half-finished resources are now “idle”. Spending declines. Prices are forced down.
The central bank, because it “targets” prices, inflates more money. To the extent this brings about more credit expansion, interest rates are pushed further down. This enables the mining company to borrow cheaper to continue the project.
So for the project that still cannot be completed, the error realization is postponed somewhat into the future. More complimentary resources are, temporally, going to the mining company, and thus away from every other project. The capital structure is becoming increasingly stressed. It cannot handle the projects started because consumers aren’t saving enough.
To the eye that only looks at “output” and “employment”, things look A-OK. The economy is “growing” and “unemployment” is falling, or at least isn’t rising.
But at some point, physical nature as controlled by the end consumer, will eventually manifest itself in such scarcity that not even interest rates at near zero can facilitate a growing, sustainable capital structure. The economy is so stressed that not even virtually free borrowed money can gather enough resources to complete the existing projects. Sound familiar?
Obviously, it would be ludicrous to imagine that this problem can be solved by more inflation and more credit expansion. The problem isn’t insufficient money, it’s insufficient real resources given the resource hungry projects that have been started. Since we can’t make required real resources appear out of thin air, the only solution that makes sense is to stop the existing projects that require more specific resources than are available. In other words, correction. Or what economists call recession. Or what pundits call doom and gloom. Or what you likely call sadness, anxiety, fear, helplessness.
“All the indicator: income, productivity balance sheets, profit margins are stable. “Because resources, that might have gone into different lines of production, were distorted by the Fed’s manipulation”
In a very general sense, that’s true.”
“But ultimately useless”
It’s not useless. It is actually what is going on.
“You’ve made opportunity cost, and counterfactual reasoning into so broad a category as to be almost meaningless.”
You just don’t understand it. You’re taking what you do not understand, and believing that because you don’t get it, it must be useless and wrong. You’re not the standard. What is useless to you personally is irrelevant to this problem of social coordination.
“You can never be wrong.”
Not true. I can be wrong. You only have to provide a superior theory. Have you done that? Be honest.
“It’s like me speculating on where we would be now if the industrial revolution had occurred in ancient rome, rather than GB in the 1700-1800′s. its fun but ultimately a pointless exercise, until we invent a time machine”
It’s not pointless because by recognizing the fact that all choices and actions have costs, it helps us then understand that maybe there should be a particular mechanism, a social ethic, by which we decide where resources and labor ought to go, so that we can make the best of our imperfect selves and limited knowledge.
The best system so far discovered is a totally unhampered free market price system. It is the most humane, and the most efficient. It is so humane that it minimizes bad investments that cause pain down the road after the coordination errors are realized. By minimizing these erroneous investments, we minimize the pain associated with correcting them. Instead of tens of millions of people losing their jobs all across the country for the mistakes that a small group of people with violence backed coercive authority over the money supply, we will see far fewer people lose their jobs at any one time, because the free market monetary order is preventing the quantity of errors that accumulate under a monopoly money order immune from profit and loss.
“Tell the skeptics WHERE those resources might have gone, then you might have more people become rothbardians.”
What skeptics? You’re no skeptic. You are a true believer in government omnipotence. You believe in mommy and daddy government. You believe that shoving a political constitution and a gun in someone’s hands can give them magic powers to save us from ourselves.
The only skeptics here are those who question that dogma.
To answer your question: In general, if we know that too many resources were devoted to longer term, more capital intensive projects, due to artificially low interest rates, then the answer should be obvious. More should have gone where the end consumer was willing to pay for them via their spending and saving activities: in shorter term, less capital intensive projects.
“Oh and its priceless, you taking on an indignant tone, when it comes to rudeness. You’ve been the master of it at the money illusion.com for some time, (and still are, if my suspicions are correct).”
Actually, while I was visiting that blog, Professor Sumner was extremely rude to me, even while I was civil. So were his acolytes. I got rude because they got rude. I got rude with you because you got rude with me.
Notice however in this post, I am not being rude to you. That’s because you were not really rude in your post I am replying to here. See a pattern?
If you aren’t rude to me, I won’t be rude to you.
Your problem is that you want to be rude, without others being rude to you. I don’t work that way.
“i’m not the one who came swaggering (cyber-metaphorically speaking) into scott’s blog, itching for a fight, calling your ideological cousins (!) from the Chicago School statists, and insulting scott.”
But he is a statist. That isn’t rude, it’s just accurate. He is not anarchist. He is pro-central banking and pro-progressive taxation, pro-welfare, and on and on.
Professor Sumner has called me an ideologue, a moron, spiteful, petty, and a host of other names.
http://www.themoneyillusion.com/?p=17692&cpage=1#comment-205619
You have it completely backwards. He insulted me.
Paradox. That sound like a bad thing.
“He that believeth in me though he die yet shall he live.”
“The last shall be first and the first shall be last.”
“Given that interest rates are lower, investors, to the extent that they borrow, would take those funds and start projects that were previously unprofitable due to too high of costs, but are now profitable because borrowing costs went down. Longer term projects are stimulated, because longer term projects are most sensitive to interest rate changes. The law of opportunity costs here, properly used, as opposed to not even used at all in your examples, enables us to know that because longer term projects are stimulated, it makes it impossible for those resources and labor to be made available for shorter term projects at this time.”
Oh boy. In the real world that never happens Workers in the capital goods industries have to eat of course, so they spend money on consumption goods. What happens in a boom is that consumer and capital goods rise, so “short-term projects” and “long term” are both present in the economy. there is no evidence of shortages while the “hypotheical boom is underway. I say to you again, you just assert without any evidence, or even theoretical reasoning, that those projects are ‘unsustainable” if what you are saying were true, there HAS to be a predictive indicator that one can use, (income balance sheets, profit margins, or discover your own!) else you are spouting gibberish.
if I told you that the world we we live in is an illusion, that the Wachowski brothers were RIGHT when they made The Matrix trilogy, that the world we live in today is actually the matrix, you would rightly demand evidence that what I am saying is true, that I am not a certifiable lunatic. If i told you that there was no such evidence, that my assertion is non-falsifiable based on pure reason, and for every unit of evidence you bring, I have a convenient explanation to dismiss it entirely, and I patronizingly and condescendingly imply to you “you just don’t understand it,” or worse, ‘you are in league with the machines, you would rightly throw up your hands and say to your friends that I am a nut job.
In science, there is such a thing as the burden of proof when one is making such an extraordinary statement. Extraordinary claims require extraordinary evidence. Before you go out spouting that the moon is made of green cheese, you have to prove it.
“Edward” just does not get it. The whole purpose of Keynesian and/or monetarist intervention is to coerce a result that otherwise would not occur. Once that road is taken as the result of coercion, we can never know exactly what would have transpired absent the coercion BECAUSE IT DID NOT HAPPEN. The reason we have the same arguments over and over is because the statists cannot understand the basic concepts behind Austrian analysis or laissez faire. I’ve quoted Hayek on this subject of the road not taken many times before. (This is the quote that the wacky LK runs off with and constantly misrepresents).
In a 1975 speech, Hayek stated:
These discrepancies of demand and supply in different industries, discrepancies between the distribution of demand and the allocation of the factors of production, are in the last analysis due to some distortion in the price system that has directed resources to false uses. It can be corrected only by making sure, first, that prices achieve what, somewhat misleadingly, we call an equilibrium structure, and second, that labor is reallocated according to these new prices. ****
The primary cause of the appearance of extensive unemployment, however, is a deviation of the actual structure of prices and wages from its equilibrium structure. Remember, please: that is the crucial concept. The point I want to make is that this equilibrium structure of prices is something which we cannot know beforehand because the only way to discover it is to give the market free play; by definition, therefore, the divergence of actual prices from the equilibrium structure is something that can never be statistically measured. ****
In contrast, the modern fashion demands that a theoretical assertion which cannot be statistically tested must not be taken seriously and has to be discarded. As a result of this belief, a theory which, in my opinion, is the true explanation has been discarded as not adequately confirmed, and a false theory has been generally accepted merely because it happens to be the only one for which statistical evidence, even though very inadequate evidence, is available.”
http://www.flickr.com/photos/bob_roddis/7534880036/in/set-72157630494776170/lightbox/
“It can be corrected only by making sure, first, that prices achieve what, somewhat misleadingly, we call an equilibrium structure, “
Because no monetarist, neoclassical or Keynesian understands market clearing, equilibrium prices.
But wait… roddis tells us he doesn’t even understand the basic concept Hayek is invoking:
“I do not like the term “market clearing prices”. I don’t use it and I do not think it is particularly helpful in understanding reality. When I see the term used, my reaction is always “WTF are you actually trying to say”?”
http://mikenormaneconomics.blogspot.com/2013/05/daniel-little-what-about-marx.html?showComment=1369144674917#c9135395801097278615
I don’t like the term “market clearing prices” because it omits the notion of “prices for what” and allows dishonest types like yourself to artificially separate the concept of “prices” from the quantity, quality, style, location, consumer base etc……from the notion of prices. The concept you are distorting is that prices are information in the form of “price for what” and that human beings are then quite flexible to change price, quantity, quality, style etc as the case may be, not just price cut, price cut, price cut, which ignores subjective values and human behavior in general.
I’m also on to your silly game because “post Keynesians” do not believe that human beings are flexible in their ability to change prices, quantities, qualities, styles etc as the case may be and require coercive “help” from krypto-Nazis like yourself in the form of funny money and unpayable government debt to make it through the day.
Since we’ve been over this so many times before, I don’t see the need to go back and forth on it another 781 times.
“I don’t like the term “market clearing prices” because it omits the notion of “prices for what”
lol.. so what do you think “market clearing prices” refers to, if not goods and services?
Flying monkeys, magical flying unicorns?
Pseudonyms?
And so now you are saying you DO understand what a market clearing price is and a set of market clearing prices?
So you’re admitting that Hayek is invoking this concept in your stock quote?
You’re conceding your previous attempts to deny this were rubbish?
What I said was that there might be “market clearing prices” during the entirety of a 25 year unsustainable Keynesian boom. Therefore, “market clearing prices” were not the gist of what Hayek was saying there nor were they the gist of what I was quoting Hayek for.
You dishonest person. It’s over. Drop it.
Therefore, “market clearing prices” were not the gist of what Hayek was saying
So Hayek’s fundamental concept is an equilibrium (market clearing) structure of wages and yet “‘market clearing prices’ were not the gist of what Hayek was saying”.
Sheer genius.
Because the gist of what he was saying was that the regime of unadulterated prices did not exist and therefore could not be measured.
You dishonest person. It’s over. Drop it.
Hayek advocated price level stability, not your child-like ‘whatever’ deflation-is-great-I-love-shiny-metal-objects ideology.
“A stable price level and a high and stable level of employment do not require or permit the total quantity of money to be kept constant or to change at a constant rate. It demands something similar yet still significantly different, namely that the quantity of money (or rather the aggregate value of all the most liquid assets) be kept such that people will not reduce or increase their outlay for the purpose of adapting their balances to their altered liquidity preferences. Keeping the quantity of money constant does not assure that the money stream will remain constant, and in order to make the volume of the money stream behave in a desired manner the supply of money must possess considerable elasticity”. (p.81)
“a currency stable in terms of raw material prices is probably also the nearest approach we can hope to achieve to one conducive to stability of general economic activity”. (p.75)
“If increases or decreases of the quantity of money never exceeded the amount necessary to keep average prices approximately constant, we would come as close to a condition in which investment approximately corresponded to saving as we are likely to do by any conceivable method” (p.87).
“If the value of money is so regulated that an appropriate average of prices is kept constant, the probabilities of future price movements with which all planning of future activities will have to cope can be represented as in Figure I. Though in this case the unpredictability of particular future prices, inevitable in a functioning market economy, remains, the fairly high long-run chances are that for people in general the effects of the unforeseen price changes will just about cancel out. They will at least not cause a general error of expectations in one direction but on the whole make fairly successful calculations based on the assumption of the continuance of prices” (p.71-72)
“The reason why people will tend to prefer a currency with a value stable in terms of commodities will thus be that it will help them to minimise the effects of the unavoidable uncertainty about price movements because the effect of errors in opposite directions will tend to cancel each other out. This cancelling will not take place if the median around which the deviation of individual prices clusters is not zero but some unknown magnitude”. (p.74)
“If we are right that, being able to choose, the public would prefer a currency whose purchasing power it could expect to be stable, this would provide a better currency and secure more stable business conditions than have ever existed before”. (p.101)
The problem is that you quote Hayek to support your facile arguments, but in fact you have no understanding of his actual economic theory.
Just to clarify, by price level stability, Hayek meant an average or general rate of (price) inflation of 0%.
That’s why I’m a Rothbardian and supporter of Mises. I quote Hayek when he says something in a way that is understandable that people refuse to understand. MF often points out our problems with Hayek.
BTW, “y” is the fine fellow who made me this and I’m going to do my best to ignore him.
http://www.flickr.com/photos/bob_roddis/8413813679/
Hayek argued that the deflationary gold-specie money system you desire would actually cause economic ‘miscalculation’ or ‘discoordination’, not cure it. For him price level stability was necessary for successful ‘economic calculation’. You clearly don’t understand this, otherwise you wouldn’t think that quoting Hayek somehow supports your know-nothing belief system.
(All above quotes from ‘Denationalisation of Money’ 1978)
I understand it and I disagree with it because of, for starters, Cantillon Effects. Further, the concept of “price stability” is nonsense.
Didn’t HD camcorders used to cost $3000 not so long ago?
http://tinyurl.com/pdzthga
“I disagree with it because…”
because you don’t have a clue what you’re talking about and just latch on to any argument or slogan which you think justifies your irrational beliefs and obsessions.
Hayek argued that the supposed effects on ‘the structure of relative prices’, i.e. ‘cantillon effects’, would be minimized in an economy with price level stability (equivalent to 0% price inflation/deflation), and of no practical importance.
Conversely he argued that an economy subject to general price deflation would experience ‘distortions’ in the structure of relative prices equivalent to those he considered to be created by inflation. As such general price deflation of the sort you advocate would, according to Hayek, impede sucessful ‘economic calculation’.
But I guess you don’t really understand much about the basic austrian concept of ‘economic calculation’.
Theft, fraud and price distortions are allegedly “minimized” all to solve a “problem” that does not exist. We’ve answered this already.
zzzzzzzzzzzzz
http://consultingbyrpm.com/blog/2013/05/great-moments-in-paradox-history.html#comment-65404
“Hayek argued that the supposed effects on ‘the structure of relative prices’, i.e. ‘cantillon effects’, would be minimized in an economy with price level stability (equivalent to 0% price inflation/deflation), and of no practical importance.”
Hayek was wrong.
“Conversely he argued that an economy subject to general price deflation would experience ‘distortions’ in the structure of relative prices equivalent to those he considered to be created by inflation. As such general price deflation of the sort you advocate would, according to Hayek, impede sucessful ‘economic calculation’.”
Hayek was wrong about that too.
“But I guess you don’t really understand much about the basic austrian concept of ‘economic calculation’.”
Mises is the economist who formulated these concepts, not Hayek.
Tom Woods and Bob Higgs were examining what amounts to the almost universal belief among US citizens in what I call “The Mary Poppins Theory of Government”. The government, the magic nanny, is exogenous, benevolent, essential and omniscient: We would all die without its magical powers.
But here’s another feature of it: the public is raised to believe that the absence of the U.S. government’s intervention somewhere would have been unthinkable. It’s the same error we see in domestic policy: why, without Government Program X, where would we be? Without Foreign Intervention Y, bad guys would be everywhere, etc. As if there are no other relevant considerations, no negative effects of the intervention, no unintended consequences.
http://www.tomwoods.com/blog/dont-show-me-photos/
“y” and “Edward” are so desperate that they actually find solace in the fact that even Hayek called upon the magic nanny once in a while to solve a problem that didn’t exist. “See! Even Hayek believes in the magic nanny, unlike you creeps who don’t.”
Mommy issues. Daddy issues. Magic nanny issues. Oh my.
The funny thing about all this is that Rothbard anticipated this tactic used by statists, as far back as 1958:
“This then, is the face that F.A. Hayek will present to the world in his Constitution of Liberty. It is a face such that, if I were a young man first getting interested in political questions, and I should read this as the best product of the “extreme Right,” I would become a roaring leftist in no time, and so I believe would almost anyone. That is why I consider this such a dangerous book and why I believe that right-wingers should attack this book with great vigor when it appears, instead of what I am sure they will do: applaud it like so many trained seals. For (1) Hayek attacks laissez-faire and attacks or ignores the true libertarians, thus setting up the “even Hayek admits . . .” line; and (2) his argument is based on a deprecation or dismissal of both reason and justice, so that anyone interested in reason or justice
would tend to oppose the whole book. And because of Hayek’s great prominence in the intellectual world, any failure by extreme right-wingers to attack the book with the implacable vigor it deserves will inordinately harm the rightwing cause that we all hold dear.” – Murray Rothbard, CONFIDENTIAL MEMO ON F.A. HAYEK’S
CONSTITUTION OF LIBERTY, January 21, 1958, To the Volker Fund.
Bob, mindlessly repeating infantile slogans is not the same thing as making a coherent argument.
“y”
Why don’t you first demonstrate that there is some monstrous “macro” problem with the English common law system of private property, contracts and personal safety that cannot be resolved without violence before insisting upon the initiation of violence to solve imaginary problems that do not exist.
While you are at it, stop ascribing magic powers to those who initiate such violence.
Bob,
I have no problem with English common law, nor do I advocate the initiation of violence, nor do I ascribe magic powers to anyone.
Grow up, you stupid little child.
“Oh boy. In the real world that never happens”
Yes, it does.
“Workers in the capital goods industries have to eat of course, so they spend money on consumption goods.”
They have to eat whether they are in capital goods or consumer goods industries. It’s not what they consume that matters, it’s what they are producing that matters.
” What happens in a boom is that consumer and capital goods rise, so “short-term projects” and “long term” are both present in the economy.”
If that happens, then, as Murphy’s sushi model explains, there is unsufficient investment to the “middle stages”.
“there is no evidence of shortages while the “hypotheical boom is underway.”
Yes there is. One piece of evidence is the fact that the Fed has to accelerate its money printing to delay the correction. Another piece of evidence is that during a correction, there is relatively more problems in the longer term, more heavily capitalized industries. This is evidence that not enough resources were devoted to shorter term, less capital intensive industries.
“I say to you again, you just assert without any evidence, or even theoretical reasoning, that those projects are ‘unsustainable” if what you are saying were true, there HAS to be a predictive indicator that one can use, (income balance sheets, profit margins, or discover your own!) else you are spouting gibberish.”
False. I can know that should a project begin that requires more resources than are available, that this project is inevitably going to be corrected. I can know that while not being able to predict exactly when the errors are going to be realized.
I do not assert anything without evidence. You just don’t know the evidence.
“if I told you that the world we we live in is an illusion, that the Wachowski brothers were RIGHT when they made The Matrix trilogy, that the world we live in today is actually the matrix, you would rightly demand evidence that what I am saying is true, that I am not a certifiable lunatic.”
Not to a philosopher, who wouldn’t be fixated on the self-contradictory doctrine that positivist-empiricism is the only method of ascertaining true knowledge about the world.
A person who is an intellectual isn’t going to simply believe in, without really thinking about it, methodological monism.
You were merely told that “falsifiable theory -> data collection -> falsification/confirmation” is the only valid method of knowledge accumulation, and you lapped it up because you don’t think very deeply.
“If i told you that there was no such evidence, that my assertion is non-falsifiable based on pure reason, and for every unit of evidence you bring, I have a convenient explanation to dismiss it entirely, and I patronizingly and condescendingly imply to you “you just don’t understand it,” or worse, ‘you are in league with the machines, you would rightly throw up your hands and say to your friends that I am a nut job.”
You can’t empirically falsify the Pythagorean theorem.
You can’t empirically falsify the proposition that falsificationism is the only valid method of learning about the world. To believe that falsificationism need not be falsified, is a contradiction. To believe that it can be, is begging the question. Either way, falsificationism isn’t universal.
“In science, there is such a thing as the burden of proof when one is making such an extraordinary statement.”
STATISTS MAKE EXTRAORDINARY STATEMENTS WITHOUT RATIOAL PROOF.
“Extraordinary claims require extraordinary evidence. Before you go out spouting that the moon is made of green cheese, you have to prove it.”
Before you go out spewing the nonsense that initiating violence against innocent people makes their lives better off, you’re going to have to prove it.
“In case you haven’t been paying attention, the mixed US economy for example is becoming more socialist over time. The trend is clear. We are being spied on more, we are being targeted more, we are being “regulated” more than ever. Most of the bills passed to law by Congress are laws that give the state more power, not less power or equal power. Accumulating these laws over time *is* a devolution to socialism.”
Unfortunately, that IS true. But that doesn’t mean we can’t theoretically reverse the trend. Scott is trying. I have a suspicion that all the things you object about him, (progressive taxation, welfare.. etc..) are actually red herrings designed to make himself sound more ‘reasonable’ to his progressive readers, to make himself get taken “seriously”
You’re being a mindlessly LITERAL person, like Rothbard did when he actually took Milton Friedman seriously
when Fried. advocated a negative income tax to leftist audiences. he said quietly later on that he advocated it as a REPLACEMENT for all the welfare we have now, NOT as complimentary, and he actually opposed it when it was proposed by congress once, because it was proposed in addition, not as replacement to what we have now
“Unfortunately, that IS true. But that doesn’t mean we can’t theoretically reverse the trend.”
We can’t reverse the trend if the state is tasked with solving problems (intervening) that are unintended consequences of the state’s prior problem solving (prior intervention).
This is the context for Mises’ argument that mixed economies lead to socialism.
If instead you want to argue that there is a public innovation in philosophy, if instead of the state being consisered a part of the solution, it is instead kept to the same intervention, and the problems the state created by past interventions are solved by non-state means, then you are actually not disagreeing with Mises, for he held that the public was the ultimate backstop for what happens politically, and economically. If Mises were told that there is a change in philosophy among the public, to desire less government activity and thus more non-government activity, then he would fully agree with you if you said socialism is not an evitable outcome.
“Milton Friedman said quietly later on that he advocated it as a REPLACEMENT for all the welfare we have now, NOT as complimentary, and Friedman actually opposed it when it was proposed by congress once, because it was proposed in addition, not as replacement to what we have now”
Do you have any positive references of economists who are anarchists?
Or are the only “liberal” economists worth citing are those who weren’t anarchists?
Bob Roddis:
“Edward” just does not get it. The whole purpose of Keynesian and/or monetarist intervention is to coerce a result that otherwise would not occur. Once that road is taken as the result of coercion, we can never know exactly what would have transpired absent the coercion BECAUSE IT DID NOT HAPPEN. The reason we have the same arguments over and over is because the statists cannot understand the basic concepts behind Austrian analysis or laissez faire”
Me:
“If i told you that there was no such evidence, that my assertion is non-falsifiable based on pure reason, and for every unit of evidence you bring, I have a convenient explanation to dismiss it entirely, and I patronizingly and condescendingly imply to you “you just don’t understand it,” or worse, ‘you are in league with the machines, you would rightly throw up your hands and say to your friends that I am a nut job.”
Bob just proved my point
What point?
“Hayek argued that the deflationary gold-specie money system you desire would actually cause economic ‘miscalculation’ or ‘discoordination’, not cure it. For him price level stability was necessary for successful ‘economic calculation’. You clearly don’t understand this, otherwise you wouldn’t think that quoting Hayek somehow supports your know-nothing belief system.
(All above quotes from ‘Denationalisation of Money’ 1978)’
That’s a good point y. It proves that Hayek is not as hopeless as Mises or Rothbard
Rothbard:
Many economists, beginning with Irving Fisher at the turn of the twentieth century, and including Benjamin Graham and an earlier F.A. Hayek, have hankered after some form of “commodity dollar,” in which the dollar is defined, not as a weight of a single commodity, but in terms of a “market basket” of two or many more commodities.[10] There are many deep-seated flaws in this approach. In the first place, such a market-basket currency has never emerged spontaneously from the workings of the market. It would have to be imposed (to use a derogatory term from Hayek himself) as a “constructivist” scheme from the top, from government to be inflicted upon the market. Second, and as a corollary, the government would be obviously in charge, since a market-basket currency does not, unlike the use of units of weight in exchange, arise from the free market itself. The government could and would, then, alter the ratios of weights, adjust the various fixed terms, and so forth. Third, the hankering for a fixed market basket is an outgrowth of a strong desire for the government to regulate the economy so as to keep the “price level” constant. As we have seen, the natural tendency of the free market is to lower prices over time, in accordance with growing productivity and increased supplies of goods. There is no good reason for the government to interfere. Indeed, if it does so, it can only create a boom-and-bust business cycle by expanding credit to keep prices artificially higher than they would be on the free market.
Furthermore, there are other grave problems with the commodity-basket approach.There is, for one thing, no such unitary entity as “the price level” which would be kept constant. The entire concept of price level is an artificial construction masking the fact that it can only consist of individual prices, each varying continually in relation to each other. Emphasis added
http://mises.org/rothbard/genuine.asp
“There is, for one thing, no such unitary entity as “the price level” which would be kept constant. The entire concept of price level is an artificial construction masking the fact that it can only consist of individual prices, each varying continually in relation to each other. “
Nominalism pushed to stupid extremes.
Many useful and meaningful concepts are “artificial constructions” by the human mind, such as the mathematical concept of an average, universals, etc.
1. I fail to see how a constitutional rule could be written that allows for only the “good” kind of dilution while precluding the “bad” kind.
2. The proposal provides the folks with the SWAT teams an opening a mile wide to transfer and swipe purchasing power all to solve a problem that does not exist.
3. The proposal flies in the face of what Hayek taught in “The Road to Serfdom”.
4. It will lead to more business cycles which the dishonest Keynesian and monetarists will blame on “unconstrained capitalism”.
http://www.modernmoneyandpublicpurpose.com/seminar-7-financial-reform.html
5. As stated above, it will fatally distort the tendency towards cheaper and cheaper goods and services over time.
“Nominalism pushed to stupid extremes.”
Not really. Price levels have some meaning yes. When we say that the price level doubled, we understand the basic meaning of what is being argued.
But it can’t be measured empirically. If this year specific goods X, Y and Z are sold in units of 100, 50, and 25, respectively, and priced at $1, $2, and $4, respectively, while last year specific goods A, B and C are sold in units of 90, 40, and 20, respectively, and priced at $0.90, $1.75 and $3.50, respectively, then there is no way to calculate by what percentage “the price level” increased. Even saying “the price level” already presupposes the same qualitative concept passes through time, and increases or decreases quantitatively over time.
Production over time in the real world does not consist of the same exact goods being produced year in, year out, whereby only their prices change. If they did, then price levels can be said to be measurable. But because production changes over time, because new goods are always being introduced and old goods are always being jettisoned, we can’t measure what doesn’t actually exist.
“Many useful and meaningful concepts are “artificial constructions” by the human mind, such as the mathematical concept of an average, universals, etc.
These concepts, when utilized in price level discussions and estimations, are not actually treated as purely mental concepts. They are treated as actual measurements which supposedly provides objective information of real world events.
Having said that, there is only one way that “price levels” can be meaningful measurements, but it is so abstract that it becomes pretty useless. First we have to understand that if we are going to be considering ourselves as measuring real world price levels, then we have to actually find a single concept, the dollar exchange ratio, i.e. “measurement”, of which doesn’t actually change in terms of form over time, but does change quantitatively.
The only similarity between heterogeneous goods is that they are all “existents.” An existent is a unitary concept. One good is always one good, praxeologically. One good sold for $5.00 and one good sold for $10.00, is two goods sold for an average of $7.50 each. The price level here is $7.50.
So if last year a total of 1 trillion goods are produced for an average price of $10 each, and this year a total of 1 trillion goods are produced for an average price of $10.50 each, then we can “measure” the price level as having increased by 5%. Not really useful, because it doesn’t take into account how valuable each good is, and puts equal weight on a mansion as a single piece of gum. Not really useful, but the only valid “measure” of price levels that I can think of.
Then we also have Hayek bemoaning the removal over time of the fetters upon government to inflate, including the end of “the gold standard”.
Page 9:
http://www.flickr.com/photos/bob_roddis/7534880036/in/set-72157630494776170/lightbox/
Edward:
Hayek was wrong about this.
In terms of his economics, Hayek was a social democrat. His prominance is in sociology.
Hayek is not “not as hopeless” just because he said something that gives you the warm and fuzzies on the inside.
MF,
“What point”
Can you read? Or did you miss the whole analogy my remarks on the Matrix movies?
I can read, and I still don’t see how what you said makes the point referred to valid.
You can’t empirically falsify the Pythagorean theorem.
You can’t empirically falsify the proposition that falsificationism is the only valid method of learning about the world. To believe that falsificationism need not be falsified, is a contradiction. To believe that it can be, is begging the question. Either way, falsificationism isn’t universal.”
I think you are misunderstanding the nature of the word, “falsifiable.” I never said that theory or deduction was an invalid way of learning about the world. I also think you misunderstand what I am. (maybe its my fault, for not explaining) I’m a rational (or theoretical) empiricist, not a logical positivist or vulgar empriricst. I believe in both methods, for the natural sciences and for human action. There’s nothing wrong with theoretical modeling, even LK would say that. Where most of the Austrians would go wrong is saying that the empirical world can’t test the propositions of economic theory, which is ludicrous nonsense. First, you can in fact conduct economic experiments in the laboratory. (Ever heard of game theory tests? the U of C has done a lot of games testing- “prisoner’s dilemma” dictator games, etc.) Second, natural experiments are an imperfect and sound way of isolating cause and effect. History does;n’t repeat itself exactly but it does rhyme.
You can’t EMPIRICALLY falsify the Pythagorean theorem, but you can use the reductio ad absurdum method and see where it leads. You can try to falsify the proposition that everything is falsifiable and end up in absurdist bedlam. It can’t be falsified BECAUSE IT SUCCEEDED EVERY POSSIBLE TEST, not because it isn’t falsifiable. Everything theoretically falsifiable I can’t empirically falsify the idea that time travel is possible, but that doesn’t mean that in some point in the future, we (humans) won’t try and build it.
Its possible in theory to design a valid test now that we can use centuries later, when we have Star Trek technology.
Notice I’m not saying that it is 100% impossible that the world we live in is the Matrix (or that Austrian economics has something to offer) . I’m saying that IF that were true, somebody would have seen something that be suspicious, and would prove it.
On to Austrian economics., you mentioned the fact that the Fed needs to accelerate money printing to hold off the collapse. That’s not strong enough evidence. Its easily consistent with the view that a rise in cash holding times meant that the vast majority of people and businesses. were saving more money relative to their next earnings cycle.
Another thing you said was that their are many more problems in the longer term, relatively more capitalized industries during the bust, and this implies that more resources need to go into the shorter term, more consumer oriented projects.
Shouldn’t it be the other way around?
If there are more problems in a certain group of industries, shouldn’t that imply that more workers need to go into those industries to fix the problems? After hall what happens in a bust is MORE saving relative to consumption, so time preferences LENGTHEN, not shorten. (And also, I’m not convinced that there are actually more problems in the capital goods industries. Define problems. Even theoretically. Then point me towards the info- STARTING WHEN THE BUST OCCURRED in late 2008, and not in 2006 to 2007, which is not a valid test, because certain industries can always suffer problems even during a boom)
But wait, there’s more. you mentioned the “middle stages.’ Shouldn’t that imply an observable metric of middle stage businesses in the consumer goods and capital goods industries earning abnormally high margins on the one hand, and/ or suffering abnormally high shortages on the other? After all Bob’s “sushi” story. has this. You can observe the degradation of capital in real time in his theoretical example.
“I think you are misunderstanding the nature of the word, “falsifiable.””
How so?
“I never said that theory or deduction was an invalid way of learning about the world.”
You didn’t have to say this explicitly. It is implied your mentioning of it. You said:
“your logic is sloppy, your conclusions are unsound, and your mind is closed. Because you won’t subject yourself to a falsifiability tests, (even theoretically?”
Here you are calling my logic and conclusions that are derived deductively, “sloppy” and “unsound” because I refuse to use falsificationism on those arguments and premises that are categorically not a posteriori.
This is you saying that falsificationism is universal, and that a priori deduction is invalid.
Then you said:
“if I told you that the world we we live in is an illusion, that the Wachowski brothers were RIGHT when they made The Matrix trilogy, that the world we live in today is actually the matrix, you would rightly demand evidence that what I am saying is true, that I am not a certifiable lunatic. If i told you that there was no such evidence, that my assertion is non-falsifiable based on pure reason, and for every unit of evidence you bring, I have a convenient explanation to dismiss it entirely, and I patronizingly and condescendingly imply to you “you just don’t understand it,” or worse, ‘you are in league with the machines, you would rightly throw up your hands and say to your friends that I am a nut job.”
This is one giant dump on a priorism, and deduction.
Edward, you do not understand falsificationism, and you do not understand a priorism.
Your frustration in not understanding it is manifesting in an outward resentment at those who come to different conclusions that you regarding the nature of the economy and the propositions of economic science. In fact, you don’t understand it so much that the only way you can put forth a non-falsifiable proposition yourself is via analogy to Hollywood movies.
You are using the analogy of the matrix because such an analogy is a specific type of a priori argument, one akin to belief in God. Praxeology on the other hand deals with real world human action. The deductions here concern actual human life, not some deus ex machina entity that is controlling the entire universe.
The reason why people keep telling you that you don’t understand praxeology, a priorism, and so on, is not merely because you don’t understand it. It is because you’re such a douche about it. You constantly attack and belittle the people who don’t believe in mommy and daddy government, and it’s not just because you’re disagreeing, it’s because you’re trying to *refute* them using unsound, garbage reasoning. Your logic is horrible. Which is not in itself all that problematic, but it’s the way you carry yourself that is why you are being treated in a way that you don’t believe is justified. As if because you have been awarded the mommy and daddy approval, that you don’t need to be couth or logical, as if it’s only up to us to coddle and kowtow to your nonsense.
What you do and do not say regarding falsifiable is not what falsificationism entails.
“I also think you misunderstand what I am.”
You are an individual human actor. Nothing else matters here. I don’t care if you label yourself Captain Counterfeiter, or Viceroy of Violence, or General Goon, or Lieutenant Looter.
“I’m a rational (or theoretical) empiricist, not a logical positivist or vulgar empriricst.”
Then why demand that I “subject myself” (as if you want me to become a “believer” or mental slave) to “falsifiable theory, data collection, test, confirmation/falsification”, when there are propositions of a categorically different nature yet are still empirical?
Why do you hate a priorism?
“I believe in both methods, for the natural sciences and for human action. There’s nothing wrong with theoretical modeling, even LK would say that.”
No, that’s wrong. LK outwardly, against the Austrians, has a problem with propositions that are logically a priori, and not empirically falsifiable.
This isn’t just theoretical “modelling”, which can be confirmed or falsified by experience. This is about truths of the world of acting man that cannot be confirmed, and cannot be falsified, by experience, because they are what grounds our understanding of *all* experience, no matter what that experience happens to be.
Experience can only be regarded as experience, can only be understood as experience, if there are a priori forms in our mental faculty that allow us to know that experience is experience and not something else.
Experience is not the datum of human knowledge. Experience is something we understand by virtue of our a priori categories of self-knowledge.
“Where most of the Austrians would go wrong is saying that the empirical world can’t test the propositions of economic theory, which is ludicrous nonsense.”
No, that’s where all empiricists like yourself go wrong.
We cannot test the law of marginal utility. This law holds that whenever the supply of a good whose units are regarded as of equal serviceability by a person increases by one additional unit, the value attached to this unit must decrease as it can only be employed as a means for the attainment of a goal that is considered less valuable than the least valuable goal previously satisfied by a unit of this good. The reason this is not empirically testable is because you cannot “see” a person employing an additional good to a lower ranked use. You cannot look at someone’s behavior, and know, by virtue of such observation, that they are employing that good to a lower ranked use. Such knowledge must be understood. You understand this because you yourself are an actor. You know the law is true because of self-reflection, not testing observations against the theory. There is no observations that can be made that would refute or verify the law.
What you misconceive to be economic propositions confirmed through experience, are actually necessary truths by virtue of self-understanding. That is, always true for actors.
“First, you can in fact conduct economic experiments in the laboratory. (Ever heard of game theory tests? the U of C has done a lot of games testing- “prisoner’s dilemma” dictator games, etc.)”
These are not tests of the economy. These are controlled experiments run by researchers who aren’t subject to the rules of the test, and participants who are subject to the rules of the test. These rules are “artificial” in the sense that they are not “the” rules of individual action. They are psychological tests for individuals who are participating as subjects.
What I can say regarding these experiments is this: First, I will ask you what is happening to the researchers who conduct these experiments? Could they have known before they run the experiments what the outcomes would be? Could the subjects have known beforehand? Obviously not, or else they wouldn’t run the experiments in the first place. They’d just know beforehand, and do something else with their bodies, resources, and time. So given that the researchers (and subjects) don’t know beforehand what will happen, it follows that they must be categorized as learning new things over time in scientifically unpredictable ways. Well, given that, we can conclude that to the extent knowledge affects our actions, to the extent that what we learn affects what we do, it follows that the actions of the researchers themselves are a priori scientifically unpredictable. This is not only the case for all of us, but it also follows from the very nature of their beliefs in running the experiments in the first place.
This knowledge you have just been exposed to, is knowledge that is not testable through falsificationism. We cannot falsify it because it is the conceptual framework of the very falsificationist methodology itself. Falsificationism implies whole boatload of “supporting” propositions that must be regarded as true apart from falsificationism itself.
Why is this? Because any “method”, no matter what it is, cannot confirm or verify itself. All “methods” are human constructs, and this is not to say that they are necessarily “artificial”, or “arbitrary”, or “hypotheses” that can only be verified through experience. No, there are a priori forms of thought that ground all knowledge, and can be known through painstaking self-reflection and deduction.
“Second, natural experiments are an imperfect and sound way of isolating cause and effect.
“History does;n’t repeat itself exactly but it does rhyme.”
Cliche infused platitude.
History as an ongoing concept, not just the time from 13 billion years ago to just now, and history as economic (human action) history, does not contain any constants akin to Plank’s constant, or Avogadro’s constant, or the fine structure constant. None have ever been discovered, and none ever will. Why? Because the very act of learning an economic constant, assuming for the sake of argument they exist, must be regarded as something that we learn, and we have just seen that learning anything changes who we are as actors.
The laws of action are known via a fundamentally different “technique” than the laws of external nature. I put quotes around “technique” because it isn’t choosable, like picking out one technique out of a series of possible ones, like we do in martial arts. No, this “technique” is the only conceivable one. It is rooted in the structure of our very selves as thinking and learning entities.
“You can’t EMPIRICALLY falsify the Pythagorean theorem, but you can use the reductio ad absurdum method and see where it leads.”
The same thing is the case with economic propositions. They are not falsifiable, and we can use reductios to see where the counter-arguments lead.
“You can try to falsify the proposition that everything is falsifiable and end up in absurdist bedlam. It can’t be falsified BECAUSE IT SUCCEEDED EVERY POSSIBLE TEST, not because it isn’t falsifiable.”
But you aren’t even “testing” it. You are necessarily bringing it with you in every understanding of history. You think you see it in history, but you’re really carrying with you as a tool to understand all history. That is why some economic propositions seem to succeed every test. It’s because they are necessary truths of all human action, and if they are true for all human action, it follows that a collection of human actions over time, would be a collection of such truths over time.
“Everything theoretically falsifiable I can’t empirically falsify the idea that time travel is possible, but that doesn’t mean that in some point in the future, we (humans) won’t try and build it.”
This is a rather muddled argument.
“Its possible in theory to design a valid test now that we can use centuries later, when we have Star Trek technology.”
This is not economics. This is physics and engineering.
You’re not thinking like an economist.
“Notice I’m not saying that it is 100% impossible that the world we live in is the Matrix (or that Austrian economics has something to offer) . I’m saying that IF that were true, somebody would have seen something that be suspicious, and would prove it.”
Overused analogy is getting tiresome.
“On to Austrian economics., you mentioned the fact that the Fed needs to accelerate money printing to hold off the collapse. That’s not strong enough evidence.”
I didn’t say it was evidence as you understand evidence to be. I don’t need to write whole tomes of deductions and proofs for you every time I type an argument.
You can spend all day demanding “why”….”why”….”why.”
“Its easily consistent with the view that a rise in cash holding times meant that the vast majority of people and businesses. were saving more money relative to their next earnings cycle.”
The Fed cannot maintain control in an environment where the supply of money accelerates over time.
“Another thing you said was that their are many more problems in the longer term, relatively more capitalized industries during the bust, and this implies that more resources need to go into the shorter term, more consumer oriented projects.”
No, because the problem is that there were too many resources and labor allocated to some sectors (like higher stage capital goods) and thus not enough elsewhere.
“Shouldn’t it be the other way around? “If there are more problems in a certain group of industries, shouldn’t that imply that more workers need to go into those industries to fix the problems?”
No, because the problem isn’t one of insufficient labor and production in the capital goods industries. It’s too much labor and production in certain parts of the economy, and not enough labor and production in other parts of the economy. The only way to solve this particular problem would be for labor and resources to be reallocated away from some industries, and into other industries. The problem is economy-wide. Too much here, not enough there.
“After hall what happens in a bust is MORE saving relative to consumption, so time preferences LENGTHEN, not shorten.”
This is a typical non-sequitur. Saving is not cash hoarding. If cash holding times increase, you cannot assume that the cash holding comes out of (now a reduced) consumption spending only. People also cut back on their investment spending.
Time preference is the difference in valuation between future and present goods.
If cash holding times lengthen, it is possible that time preferences have *fallen*, by virtue of investment spending declining, with less than declining consumption spending.
“(And also, I’m not convinced that there are actually more problems in the capital goods industries. Define problems. Even theoretically.”
This is what I mean.
“Then point me towards the info- STARTING WHEN THE BUST OCCURRED in late 2008, and not in 2006 to 2007, which is not a valid test, because certain industries can always suffer problems even during a boom)”
The bust did not start occurring in 2008. The bust started before that.
“But wait, there’s more. you mentioned the “middle stages.’ Shouldn’t that imply an observable metric of middle stage businesses in the consumer goods and capital goods industries earning abnormally high margins on the one hand, and/ or suffering abnormally high shortages on the other?”
You can’t “see” this, because we cannot scientifically predict what the economy “should” look like. Only the market process itself, of trial and error, and of learning over time, as new preferences arise, as new ideas arise, and as new technology arises, can reveal to us when, at any given moment, there is too much here and not enough there. There have been, up to this time, certain similar patterns, but this does not imply that the same patterns will always persist. Each boom and bust is different.
“After all Bob’s “sushi” story. has this. You can observe the degradation of capital in real time in his theoretical example.”
His sushi example is to educate people unaccustomed to the ABCT theory. It wasn’t an empirical prediction of what a boom and bust must look like.
A priorism means “before knowledge” or prior to experience. Even when we learn math, we learn those laws as children from txextbooks and the empirical world. That’s why I hate the misleading term ” a priori”
“A priorism means “before knowledge” or prior to experience.”
Not quite. A priorism is not “before knowledge”, for there is knowledge that is a priori.
A priori literally means “from the earlier”, while a posteriori literally means “from the later.” More accurately, they mean knowledge that derives “from the earlier” and knowledge that derives “from the later.”
“Even when we learn math, we learn those laws as children from txextbooks and the empirical world. That’s why I hate the misleading term ” a priori”.
No, the textbooks and the empirical world “awaken” what is at first a dormant intuition. As Kant wrote in the first paragraph of the introduction to his Critique:
“That all our knowledge begins with experience there can be no doubt. [MF: This is the point you are emphasizing] For how is it possible that the faculty of cognition should be awakened into exercise otherwise than by means of objects which affect our senses, and partly of themselves produce representations, partly rouse our powers of understanding into activity, to compare to connect, or to separate these, and so to convert the raw material of our sensuous impressions into a knowledge of objects, which is called experience? In respect of time, therefore, no knowledge of ours is antecedent to experience, but begins with it.
“But, though all our knowledge begins with experience, it by no means
follows that all arises out of experience [MF: This is the point I am emphasizing].”
You “hate” the term a priori because you fear its implications.
Rothbard explained that Mises described the axioms of praxeology as “a priori” because Mises was an adherent of Kantian epistemology:
Turning from the deduction process to the axioms themselves, what is their epistemological status? Here the problems are obscured by a difference of opinion within the praxeological camp, particularly on the nature of the fundamental axiom of action. Ludwig von Mises, as an adherent of Kantian epistemology, asserted that the concept of action is a priori to all experience, because it is, like the law of cause and effect, part of “the essential and necessary character of the logical structure of the human mind.” Without delving too deeply into the murky waters of epistemology, I would deny, as an Aristotelian and neo-Thomist, any such alleged “laws of logical structure” that the human mind necessarily imposes on the chaotic structure of reality. Instead, I would call all such laws “laws of reality,” which the mind apprehends from investigating and collating the facts of the real world. My view is that the fundamental axiom and subsidiary axioms are derived from the experience of reality and are therefore in the broadest sense empirical. I would agree with the Aristotelian realist view that its doctrine is radically empirical, far more so than the post-Humean empiricism which is dominant in modern philosophy. ****
It should be noted that for Mises it is only the fundamental axiom of action that is a priori; he conceded that the subsidiary axioms of the diversity of mankind and nature, and of leisure as a consumers’ good, are broadly empirical.
Modern post-Kantian philosophy has had a great deal of trouble encompassing self-evident propositions, which are marked precisely by their strong and evident truth rather than by being testable hypotheses, that are, in the current fashion, considered to be “falsifiable.”
http://mises.org/rothbard/praxeology.pdf
“I would deny, as an Aristotelian and neo-Thomist, any such alleged “laws of logical structure” that the human mind necessarily imposes on the chaotic structure of reality.”
I submit that “imposes” is too strong a term, even in Kant’s philosophy. The term “imposes” implies a sort of conflict between what is, and how our minds work. Kant did not hold that there is such a conflict, nor did he hold that our minds “add” a subjective component to what would otherwise be a pure objective “thing in itself”, in which our conceptions are in some way “degraded” from what really is.
Like all philosophers, one liners taken out of context are often the basis by which philosophies are misinterpreted. For Marx, “dictatorship of the proletariat” was taken to mean anti-democratic rule, when in reality it referred to the class content of society. For Kant, “So far it has been assumed that our knowledge had to conform to reality” was taken to mean that our minds somehow “impose” structure on reality, when in reality it referred to a formal criterion of how knowledge consistent with the external world, and ourselves, arises.
For all of the anti-Austrian empiricists out there, where is your empirical refutation of the observation that because people cannot read each others’ minds that the only way to know want they really want and need is by observation of what they actually purchase and exchange in voluntary non-fraudulent transactions?
Ooh ooh, I know, I know.
The “refutation” is the fact that even in anarcho-capitalism, people will have imperfect information, some people will commit fraud, violent crimes, and some people will make mistakes.
Because of that, a territorial monopoly initiating violence and coercion against non-violent property owners is justified.
Can’t you see the penetrating logic here, Roddis?
You forgot other essential stand-by:
In other words, your view of capitalism is Rothbardianism, which has never existed in the real world and remains as utopian as Marx’s perfect communist society?
Therefore, we cannot analyze the past to see if various transactions were the subject of violent intervention and/or fraud and thus the cause of the problems as opposed to voluntary non-fraudulent transactions. However, history clearly demonstrates that voluntary non-fraudulent activities result in “macro” problems that can only be solved by money dilution, unpayable government debt all inflicted via the threat of violence.
And that’s not a Kontradiction.
That makes sense, doesn’t it?
Since fully free trade societies have never existed, we are not permitted to use free trade principles to criticize anti-free trade activities.
But,
Since fully anti-free trade societies have never existed, we are permitted to use anti-free trade principles to criticize free trade activitices.
Seems legit.
No, your critics are disputing that, say, FR banking and credit money constituted fraud at all.
You’re just begging the question.
Bob, that’s what I’d attack if I were to take on the Austrians. I’ve never seen an honest attack on Austrian premises yet. Austrians take on the inflationists on their own terms but never the opposite. I say the debate is over. It’s just about the power now. The intellectual debate has long been over. Austrians routed the competition.
“I say the debate is over. It’s just about the power now.”
It’s been that way since at least the 1930s.
You ‘re saying Rothbard’s hideous ethics — a system where police have the right to beat and torture mere suspects and where parents face no legal penalty for starving children — has never been examined, analyzed and refuted by critics?
Maybe you should have done 5 minutes of reading:
http://edwardfeser.blogspot.com/2009/08/rothbard-as-philosopher.html
“You ‘re saying Rothbard’s hideous ethics — a system where police have the right to beat and torture mere suspects and where parents face no legal penalty for starving children — has never been examined, analyzed and refuted by critics?”
Police don’t have the right to beat or torture innocent people in Rothbard’s ethics. If the police turn out wrong, they are liable.
There’s nothing wrong with beating a person who actually planted a bomb that is going to kill thousands of people, or more. Hideous? Hardly.
And it’s also not “hideous” to refrain from shooting at parents for not feeding their children, given that the parents did not enter into a voluntary community the rules of which contain a requirement to feed one’s children.
If people are concerned about other parents not feeding their children, they can form voluntary communities which contain the law that parents must feed their children, or else face the consequences.
And you can dispense with the fake outrage LK. It’s obvious. You don’t really care about starving children, because if you did, you’d be spending your time feeding and helping starving African children, or British children, than spending all day spewing political propaganda on Murphy’s blog and yours.
Why aren’t you daily advocating for states to stop torturing *innocent* people, let alone imaginary private police torturing those who planted bombs?
Fake fake fake.
“Police don’t have the right to beat or torture innocent people in Rothbard’s ethics.
Yes, they do.
If the police turn out wrong, they are liable.”
If they take an eye or two, then the innocent man can sue. AWESOME.
That MF is now defending torture is proof of his moral bankruptcy.
“Yes, they do.”
No, they do not. Rothbard holds that is it morally wrong to beat or torture innocent people.
“If they take an eye or two, then the innocent man can sue. AWESOME.”
“That MF is now defending torture is proof of his moral bankruptcy.”
If the state takes an eye or two, then the innocent man can sue the state in court. AWESOME.
That LK is now defending torture is proof of his moral bankruptcy.
“Rothbard holds that is it morally wrong to beat or torture innocent people.”
Yes, retrospectively, but still defends their right to eat or torture MERE SUSPECTS:
“police may use such coercive methods provided that the suspect turns out to be guilty, and provided that the police are treated as themselves criminal if the suspect is not proven guilty. For, in that case, the rule of no force against non-criminals would still apply. Suppose, for example, that police beat and torture a suspected murderer to find information (not to wring a confession, since obviously a coerced confession could never be considered valid). If the suspect turns out to be guilty, then the police should be exonerated, for then they have only ladled out to the murderer a parcel of what he deserves in return”
Since they do not know that the person is guilty, Rothbard is defending their right to bear mere suspects.
Sounds like you never read the passage you attempting to defend.
“Yes, retrospectively, but still defends their right to eat or torture MERE SUSPECTS”
Use of force against suspects is ubiquitous in any society with laws.
You’re complaining about torture specifically? Well, like Rothbard said, if the torturer is wrong, then he is liable for unjust use of force against the victim.
But if the police are right, they just saved many lives.
I don’t see how this is immoral.
“Since they do not know that the person is guilty, Rothbard is defending their right to bear mere suspects.”
Yes, but the important caveat is there that if the torturer is wrong, he is liable for restitution, and in my ethics, that includes revenge torture.
That would put a tight lid on people torturing others. They have to be absolutely sure. They can’t just go around torturing innocent people for fun, because they’ll get tortured back if wrong.
“Sounds like you never read the passage you attempting to defend.”
I’ve read that passage. Sounds like you WANT to believe I did not read it.
I know that whole book.
I believe it is ethical to torture someone if I have credible information that they planted a bomb somewhere that is going to blow my family up for example, and torturing him is the only way he’ll talk.
What is wrong with stopping a murderer from murdering?
Please explain yourself instead of just faking outrage all the time.
“Yes, but the important caveat is there that if the torturer is wrong, he is liable for restitution, and in my ethics, that includes revenge torture.
Welcome to the mad world of MF!!
Where not only is police torture a reality. but REVENGE torture is practised too!
This will be stand as future proof of the extremism of your views for all to see.
It’s not immoral to torture someone who planted a bomb that is going to kill innocent people, LK.
Not sure what planet of crazy you’re from that would sanction many people dying because the mass murderer should be respected.
“And it’s also not “hideous” to refrain from shooting at parents for not feeding their children,”
Why said anything about “shooting,” idiot?
What about force to remove the victims to a home where they are in fact cared for?
Is that immoral in your bizarre and lunatic moral world?
“Why said anything about “shooting,” idiot?”
You did, given that the parents defend themselves against demands for restitution, or arrest, or kidnapping, or gunpoints.
“What about force to remove the victims to a home where they are in fact cared for?”
So I guess I can kidnap you if your parents do a less than steller job raising you?
What exactly constitutes a rights violation here?
“Is that immoral in your bizarre and lunatic moral world?”
Is your crazy, psychopathic ethical world that sanctions violence on a massive scale (statism), going to be ignored while you fake outrage at others?
You are OK with the state shooting at people if they defend their person and property from state aggression. You are a sanctioner of cold blooded murder.
““Why said anything about “shooting,” idiot?”
You did, given that the parents defend themselves against demands for restitution, or arrest, or kidnapping, or gunpoints.”
Apparently MF thinks there is no such thing as non lethal force.
You’re a sheer genius.
“Apparently MF thinks there is no such thing as non lethal force.”
Apparently LK thinks that laws are laws if they are not backed by lethal force.
Apparently all we have to do to stop paying taxes, is to declare to the IRS that any attempt to enter one’s home, will be met with equal and opposite defense, and if the threat to tax increases, so will the defense.
Apparently, the IRS is going to back down as soon as any taxpayer says they will shoot if the IRS tries to take their money.
Wake up, will you LK? You’re so incredibly ignorant that you can’t even grasp the nature of law enforcement.
Lethal force backs most laws. Especially taxation. If a taxpayer is non-aggressive, and only uses force to defend himself against IRS aggression, if the taxpayer threatens to use whatever force is necessary to defend his property, then the state WILL send armed thugs to that person’s home, and they WILL threaten to use them if the taxpayer does not ultimately obey.
All the taxpayer has to do to prove to you that laws are backed by lethal force, would be to continually defend himself against any any all aggression from the state, to the best of his ability. At some point, the police will shoot that taxpayer dead.
This is true in this country, and it is true in your country.
Without the threat of death, nobody would pay taxes. They’d just keep threatening the IRS with defensive force until the IRS relents. But they won’t, because if they do, the state is over with.
“Lethal force backs most laws. “
And it would also back private law in a Rothbardian anarcho-capitalist system.
It is just that the private sector thugs would be doing the violence or threat of violence.
So therefore Rothbardian anarcho-capitalism must be fatally flawed!
MF shoot himself in the foot.
“And it would also…”
LK just shot himself in the foot.
Ed Feser sanctions ad hominem as a legitimate argumentative tactic:
http://edwardfeser.blogspot.co.uk/2013/04/what-is-ad-hominem-fallacy.html
OK, Ed Feser’s critical thinking skills are horrible. He doesn’t have the intellectual capacity to refute Rothbard, and he should not be treated seriously by anyone who is serious about philosophy. He’s a hack, a moron, and should be flipping burgers instead of proselytizing on topics he knows little about.
No, MF, Feser is not endorsing the ad hominem, but showing how certain questioning of a person’s character or honesty is not necessarily fallacious, e.g.,
suppose what is at issue is whether a certain person is a reliable witness or an unbiased source of information, as in a court case. Then there is no fallacy whatsoever in showing that his track record reveals him to be a compulsive liar, or to have a bad memory or bad eyesight, or to have been drunk at the time of the events he claims to have witnessed, or to have a personal stake in the outcome of the case. These are ad hominem criticisms — criticisms directed “against the man” himself — but there is no fallacy involved, because the credibility of the man himself is precisely what is at issue.
Or an issue that describes you perfectly:
“Or suppose that what is at issue is, again, not whether a certain claim is true or a certain argument cogent, but instead whether a certain person is reasonable, intellectually honest, worth trying to have a conversation with, etc. For example, suppose someone in a combox shows himself by his pattern of behavior to be an ignoramus, a crank, a troll, etc. — say by repeatedly making sweeping, ungrounded, or unhinged assertions, dismissing ideas and arguments he evidently does not even understand or books he hasn’t bothered to read, or indeed by committing ad hominem and other fallacies right and left. There is in such a case nothing wrong with calling such a person an ignoramus, a crank, a troll, etc. and refusing to engage with him any further. That is certainly an attack on the person, but it is no fallacy. It is just a straightforward inference from the facts, a well-founded judgment about him and his behavior, rather than a fallacious response to some argument he has given.”
When the issue is whether MF is in fact an “ignoramus, a crank, a troll”, there is no fallacy involved in calling him that after showing exactly how he is those things.
For example, did MF even read the Feser article he just cited and claimed that Feser literally endorses the ad hominem?
As soon as one reads the article it is clear MF’s claim is false.
Either he did not read it, and is a idiot who just cited it and hoped nobody would check his comments.
Or if he read it, he’s likely to be a liar.
QED.
“No, MF, Feser is not endorsing the ad hominem, but showing how certain questioning of a person’s character or honesty is not necessarily fallacious, e.g.,
suppose what is at issue is whether a certain person is a reliable witness or an unbiased source of information, as in a court case.”
That’s endorsing ad hominem. He says it’s OK, as long as you are addressing the person themselves.
“Then there is no fallacy whatsoever in showing that his track record reveals him to be a compulsive liar, or to have a bad memory or bad eyesight, or to have been drunk at the time of the events he claims to have witnessed, or to have a personal stake in the outcome of the case. These are ad hominem criticisms — criticisms directed “against the man” himself — but there is no fallacy involved, because the credibility of the man himself is precisely what is at issue.”
Right, which is to say ad hominem is permitted.
“Or an issue that describes you perfectly:”
“Or suppose that what is at issue is, again, not whether a certain claim is true or a certain argument cogent, but instead whether a certain person is reasonable, intellectually honest, worth trying to have a conversation with, etc. For example, suppose someone in a combox shows himself by his pattern of behavior to be an ignoramus, a crank, a troll, etc. — say by repeatedly making sweeping, ungrounded, or unhinged assertions, dismissing ideas and arguments he evidently does not even understand or books he hasn’t bothered to read, or indeed by committing ad hominem and other fallacies right and left. There is in such a case nothing wrong with calling such a person an ignoramus, a crank, a troll, etc. and refusing to engage with him any further. That is certainly an attack on the person, but it is no fallacy. It is just a straightforward inference from the facts, a well-founded judgment about him and his behavior, rather than a fallacious response to some argument he has given.”
Right, Ed Feser is giving you a belief that attacking the person is justified, when you’re addressing the person and not their arguments.
“When the issue is whether MF is in fact an “ignoramus, a crank, a troll”, there is no fallacy involved in calling him that after showing exactly how he is those things.”
I’m looking forward to you actually showing these things.
“For example, did MF even read the Feser article he just cited and claimed that Feser literally endorses the ad hominem?”
Yes, and I sent you a link to my reply to his article, more than once actually.
“As soon as one reads the article it is clear MF’s claim is false.”
What claim? All I said was that Ed Feser sanctions ad hominem. I didn’t say anything other than that. You are seeing what you want to see. You are imagining me to have argued that he sanctions ad hominem to address someone’s arguments.
See? You can’t even read properly, let alone think properly.
“Either he did not read it, and is a idiot who just cited it and hoped nobody would check his comments.”
False dichotomy. I read it.
“Or if he read it, he’s likely to be a liar.”
“QED.”
Quick Emotive Douchebag?
Sure. So now you are effectively conceding the whole argument.
(1) Feser does not endorse the ad hominem FALLACY. Some uses of what we call the “ad hominem ” are NON-FALLACIOUS.
(2) when the issue is whether a person is a lair, there is no fallacy in calling a person a liar after demonstrating that they are in fact a liar.
“Sure. So now you are effectively conceding the whole argument.”
There is nothing for me to “concede” here.
Feser said that ad hominem is permitted, so I ad hominemed him.
(1) Irrelevant to my argument.
(2) Irrelevant to my argument.
“(2) Irrelevant to my argument.
What, so you are saying that some uses of what we call the “ad hominem” are NON-FALLACIOUS, huh?
Which makes a joke of your original comment.
I am not needed here anymore, you’ve already refuted yourself.
Leave MF a noose and he will hang himself.
“What, so you are saying that some uses of what we call the “ad hominem” are NON-FALLACIOUS, huh?”
I just ad hominemed Feser.
“Which makes a joke of your original comment.”
How so? My original comment was only that Feser sanctions ad hominem. That’s all I said.
Your joke of an argument is a misunderstanding of what I said. Your joke of a reply suggests I think Feser sanctions ad hominem in reply to someone’s arguments.
“I am not needed here anymore, you’ve already refuted yourself.”
What did I refute myself over? You’re imagining something that isn’t there.
“Leave MF a noose and he will hang himself.”
I’m sure that’s in your ideal world of ultra-violence, mr. fake outrage.
Oh, and just to be accurate here, a person lying in the past does not necessarily imply they will lie in the future such that you call them “a liar” now.
I won’t take your lies in the past to necessarily imply you are still lying.
After all, in “non-ergodic systems”, where “the problem of induction is particularly acute”, we can’t predict behaviors, especially of an individual.
So while Roddis exposes your lies left right and center, I won’t take that to necessarily imply you’re lying to me here and now.
You’re confusing Libertarianism, a moral philosophy, with Austrian Economics. Perhaps you need to do a little reading yourself, coupled with a little understanding of what you read.
“people cannot read each others’ minds”
No kidding. Not that any economist ever claimed that people can.
” the only way to know want they really want and need is by observation of what they actually purchase and exchange in voluntary non-fraudulent transactions?”?
That just raises the question of ethics and whether the things you mouth off about are in fact immoral or fraudulent in the first place.
(1) FR banking and credit money are not inherently fraudulent. People might misunderstand the nature of the contract, but misunderstanding is not fraud. Endogenous and elastic money supply are inherent in any modern advanced market economy.
It’s just Rothbardian idiocy to claim that a growing and elastic money suuply is immoral. It isn’t. You’d need massive coercion and violence to stop people from creating credit money, so it’s Rothbardians who are vicious little anti-capitalists.
(2) Your Rotbbardian natural rights ethics is unconvincing. It lacks convincing justification.
Anyone who can successfully refute your Rothbardian ethics and defend a different ethical system can morally justify central banks, taxation and fiat money.
At that point, the argument just collapses into a debate in higher level philosophy of ethics.
“No kidding. Not that any economist ever claimed that people can.”
Poof goes Keynesianism.
“That just raises the question of ethics and whether the things you mouth off about are in fact immoral or fraudulent in the first place.”
No, it also raises the question of how the Keynesian brainwashed thugs in government can know what interest rates ought to be, what spending ought to be, and what prices ought to be.
“(1) FR banking and credit money are not inherently fraudulent. People might misunderstand the nature of the contract, but misunderstanding is not fraud. Endogenous and elastic money supply are inherent in any modern advanced market economy.”
There has always been misunderstanding of FRB, and a lot of this has to do with banks and the state not making it clear on purpose, because they know that with more education and transparency, there will be fewer opportunities to lend money, which means less interest for the banks and less borrowing from the state.
“It’s just Rothbardian idiocy to claim that a growing and elastic money suuply is immoral. It isn’t. You’d need massive coercion and violence to stop people from creating credit money, so it’s Rothbardians who are vicious little anti-capitalists.”
You need massive coercion and violence to bail out FRB banks with state issued currency, as well as enforcing “bank holidays”, FDIC, and a host of other bandaid solutions when FRB banks go insolvent.
“(2) Your Rotbbardian natural rights ethics is unconvincing. It lacks convincing justification.”
Lack of being convincing to you, is evidence that it is superior to your violence advocating ethics.
Every one of your laundry list of “allowed” ethics, all of which miraculously happen to advocate for, or apologize for, statism, are either self-contradictory, or, when closely analyzed, allows for activities that would make a psychopath blush.
Take utilitarianism. Greatest happiness for the greatest number. If the greatest number of people would be happier if redheads were murdered, then utilitarianism would sanction it.
Take consequentialism. Consequentialism is incoherent, because it holds that the morality of an action is dependent on the future outcomes. Yet an ethic must answer what it is we can do here and now. An ethic that is grounded on what will happen a year from now, cannot answer what we can do in the meantime. Ergo, your constant references of “immediate” ethical quandries, such as a drowning victim, etc. No consideration of activities the consequences of which occur in the further future, and for good reason. It would allow gross injustices in the present, in the name of waiting for the future outcomes.
Every ethic other than ethics grounded on self-reflection, are easily refuted and exposed as flawed.
“Anyone who can successfully refute your Rothbardian ethics and defend a different ethical system can morally justify central banks, taxation and fiat money.”
If anyone can do it, why can’t you?
“At that point, the argument just collapses into a debate in higher level philosophy of ethics.”
Which you never tread.
“You’d need massive coercion and violence to stop people from creating credit money, so it’s Rothbardians who are vicious little anti-capitalists.”,”
So you are not disputing that?
“Consequentialism is incoherent, because it holds that the morality of an action is dependent on the future outcomes.”
That is nothing incoherent about that. Nobody denies that predictions now about action now might or might not be wrong.
That one might find out that one was MISTAKEN now in taking some action does not imply that the consequentialist ethics cannot distinguish right and wrong and provide a guide for action.
“So you are not disputing that?”
So you’re not disputing the massive coercion and violence needed to bail out FRB banks with state issued currency, as well as enforcing “bank holidays”, FDIC, and a host of other bandaid solutions when FRB banks go insolvent?
“That is nothing incoherent about that.”
Sure there is. It has no answer for what we can do here and now.
“Nobody denies that predictions now about action now might or might not be wrong.”
Predictions based on what? The individual? OK, I predict that by shooting at you, you will be cured of your ignorance.
Prove me wrong using consequentialist ethics that are grounded on individuals “subject to fundamental uncertainty” and “subjective expectations.”
“That one might find out that one was MISTAKEN now in taking some action does not imply that the consequentialist ethics cannot distinguish right and wrong and provide a guide for action.”
It cannot answer what is right and wrong NOW, at this moment, which an ethic is supposed to answer.
The appeal to individual subjective expectations has no rational answer in a world of fundamental uncertainty and subjective expectations.
3 hours ago I asked this question and then drove my car 10 miles away to the repair shop and rode my 10-speed back home. I come home and, of course, the question has not been answered, but instead, LK has run off like a headless chicken braying about Rothbard’s “ethics” in lieu of likely ubiquitous contractual arrangements on the same subject and private competitive FRB, a basically irrelevant subject we have answered over and over.
http://factsandotherstubbornthings.blogspot.com/2012/07/bob-roddis-makes-bad-argument.html?showComment=1342636996573#c7858137329768029587
The unanswered question:
[W]here is your empirical refutation of the observation that because people cannot read each others’ minds that the only way to know want they really want and need is by observation of what they actually purchase and exchange in voluntary non-fraudulent transactions?
(1) No economist has ever claimed that people can mindread.
(2) The whole basis of your question is Rothbardian ethics. Once your critic shows his ethics is wrong, all your justification for claiming central banks etc are immoral collapses.
(3) Also, you assume FR banking and credit money is fraud. It is not.
That you think nobody has ever refuted these ideas and the whole basis of them just shows what an ignoramus you are.
It just so happens that ethical voluntary, transparent and non-fraudulent transactions provide better information about the wants and needs of others than do unethical criminal, fraudulent and distortionary funny money transactions. Just a fluke of the universe I guess.
About FRB, you are also being your usual dishonest and subject changing self. Read the discussion at the above link. Further, if FRB did not tend to be misleading, it would not require your magic elf of an a priori omniscient benevolent regulator as you continually insist it does.
(1) Economists don’t have to explicitly declare it before we can know their ideas presuppose it.
(2) The whole basis of non-aggression does not need to be observed 100% across the whole world before we can know the destructive effects that aggression generates.
(3) FRB is not necessarily non-fraud, if it is the case that clients are in fact misled, which has, and is still, occurring throughout the world.
To coincide with LK’s final crashing and burning with his “fixprice” example, DK hits rock bottom misrepresenting libertarians on war and by promoting even more drone murders.
http://factsandotherstubbornthings.blogspot.com/2013/05/memorial-day-cheap-talk.html
No, not only do you not understand fixprices but even the basic concept of market clearing price is beyond you.
You’ve already told us that:
“I do not like the term “market clearing prices”. I don’t use it and I do not think it is particularly helpful in understanding reality. When I see the term used, my reaction is always “WTF are you actually trying to say”?”
http://mikenormaneconomics.blogspot.com/2013/05/daniel-little-what-about-marx.html?showComment=1369144674917#c9135395801097278615
“No, not only do you not understand fixprices but even the basic concept of market clearing price is beyond you.”
Funny, since Roddis has been educating you on the concept of market clearing prices for ages.
lol. No, Roddis’s reaction to talk about market clearing prices is “WTF are you actually trying to say”?”.
He’s already demonstrated his ignorance of that subject.
The fact that you are incoherent and confused in your writing, and the fact that you write passively aggressively, indirect, and not direct and to the point, doesn’t mean those who ask WTF you’re actually trying to say, are themselves lacking knowledge of facts about various theories.
Isn’t DK the guy who pined for the murder of innocent people who want to succeed from the Union? I bet if he found out his great grandfather signed him up for a death pact, he’d be the first person arguing that he has no obligation to fulfill a contract he did not agree to. I bet he sees no irony in this either.
DK fantasizes about what if there had been drone launched missiles in WWII:
http://factsandotherstubbornthings.blogspot.com/2013/05/some-memorial-day-links.html
What if the Germans and the Russians had them first? That would have been fun.
Bob, you’re like a broken record. Repeating the same stuff over and over again. If you have a point, please make it. Major_Freedom, I’d advise that you do the same and maybe keep your responses much shorter and concise so that other readers can be able follow the conversation easier. Thank you.
Dear Fan,
No thanks.
Sincerely,
Your idol.
Took you long enough to respond. Long winded rambling isn’t the same as being able to get to the point. You and Bob Roddis have to be the same guy.
You and DK have to be the same guy.
As Lord “I’m Losing — Change the Subject FAST!” Keynes fusses about extremely rare ethical paradoxes, let’s not forget that Hitler was a Keynesian too.
http://socialdemocracy21stcentury.blogspot.com/2011/09/fiscal-stimulus-in-germany-19331936.html
See. Unethical and criminal behavior go hand in hand with Keynesianism while moral and ethical voluntary and non-fraudulent behavior are the hallmark of Rothbardians.
And Mussolini’s early regime implemented a type of laissez faire program. So therefore laissez faire must be totally discredited!
Your argument skills are worthless, roddis.
Laissez faire, by definition, does not and cannot involve criminality, oh great smart one.
What, because your definition of “laissez faire” is Rothbardianism, a fantasy world?
Meanwhile in the REAL WORLD authoritarian regimes can implement laissez faire economics, e.g., Mussolini, Pinochet.
It’s not fantasy world for one individual to refrain from violating the property rights of another individual.
Meanwhile, in the real world, dictators cannot “implement” freedom. They can only step out of the way.
Criminals cannot “implement” laissez-faire.
THEORETICALLY, Hitler could have imposed a rule mandating the sentencing of Nazi police personnel to Auschwitz for violating the NAP. As such, there would be no criminal violations of the NAP that went unpunished.
I’m providing slightly absurd examples for the purpose of trying to settle upon what should be simple definitions.
You can’t have free markets and still have a dictator. That only works with Keynesianism.
Sounds like a powerful argument against laissez-faire.
“That man hit me and took my watch!”
“So what? That’s no a crime by definition.”
Imagine if Hitler had imposed the NAP on his subjects…..
The Death Squad Commandant knocks on the door of the synagogue full of Jews at the Sabbath services. The Rabbi answers the door. The Commandant tells the Rabbi to get the entire congregation outside onto the waiting trucks so the Death Squad can take them to the woods where they will be stripped naked and each shot in the head and thrown in a pit. The Rabbi tells them to go to hell and slams the door.
The Commandant walks away in disgust and says: “Aw shucks. Since the imposition of that darnned NAP, not only haven’t we been able to kill anyone or confiscate anyone’s business or property. Heck, we aren’t even allowed to break windows on the anniversary of Kristallnacht!”
“imposition”
You keep using that word. I do not think it means what you think it means.
We’re talking definitions here. We’re talking about Keynesians who insist upon “empirical” evidence like when some patients are given a placebo and some are given the new medicine. However, for their submission of historical empirical evidence, they blame things on the lack of the medicine but totally refuse to define (or even allow someone to define the conditions characterized by the placebo period).
We have submitted over and over that there is no period to which Keynesians can point to as a failure of the free market or laissez faire. Whatever failures they point to are invariably examples of monetary and price distortion.
http://socialdemocracy21stcentury.blogspot.com/2013/03/the-classical-gold-standard-era-was-myth.html
We’ve gone over this 52,215 times. Keynesians cannot or will not find the example of the free market placebo that failed that needs the Keynesian “cure”.
If Free Advice were Hogwarts, Ken B. would definitely be Snape. (My son is into Harry Potter lately.)
If FreeAdvice were Jonestown Ken B. would have survived.
“We have submitted over and over that there is no period to which Keynesians can point to as a failure of the free market or laissez faire. “
If you define “free market or laissez faire” solely as Rothbardian anarcho-capitalism, that system has never existed in the real world.
Thus, unless you want to say that some 19th century capitalist economies approximated it and use them as proxies for roughly what you would see, roddis has no empirical evidence for how his flying unicorn, utopian, magical system would work.
“Keynesians cannot or will not find the example of the free market placebo that failed that needs the Keynesian “cure”.”
No, roddis, REAL WORLD capitalism needs regulation and macro policy.
Fantasy world Rothbardianism where no economic problem could ever exists and where people (magically!) never use credit money or FR banking exists only in your fevered mind.
Of course, we can speculate on how an attempt at Rothbardianism might work, on the basis of some 19th century capitalist systems, but the empirical evidence would suggest it would have credit money, FR banking, business cycles and instability of investment — just like all real world capitalist systems.
You cannot point to the alleged failure of laissez faire when you cannot point to an example of it. Especially when you want to define the example out of existence.
Same old same old same old.
Give up. You’ve lost.
“You cannot point to the alleged failure of laissez faire when you cannot point to an example of it. “
Notice how I said we can only speculate on how your mad Rothbardtopia would work on the basis of “approximations”, e.g.,
maybe some 19th century capitalist economies.
If you deny that there are even any “approximations”, then, yes, there is not a shred of empirical evidence it would work.
You may as well tell us that you “cannot point to the alleged failure of Marx’s perfect communist society when you cannot point to an example of it.”
Yet that doesn’t stop reasonable criticism on why such a system wouldn’t work, or why a flying unicorn Rothbardtopia wouldn’t work either.
“You cannot point to the alleged failure of laissez faire when you cannot point to an example of it. “
Let it be.
LK:
“If you define “free market or laissez faire” solely as Rothbardian anarcho-capitalism, that system has never existed in the real world.”
It doesn’t have to exist 100% in the real world because we can know the destructive effects that state intervention has on market activity.
You keep making this fallacious argument that if slave emancipation does not exist, then we cannot say anything with regards to whether or not master behavior is destructive or constructive to slave standards of living.
We don’t need to actually observe everything before we can apprehend true knowledge.
“Thus, unless you want to say that some 19th century capitalist economies approximated it and use them as proxies for roughly what you would see, roddis has no empirical evidence”
We don’t need empirical evidence to know that emancipating slaves makes the (former) slaves better off.
LK:
“No, roddis, REAL WORLD capitalism needs regulation and macro policy.”
This is tantamount to saying a world with state regulation and macro policy needs state regulation and macro policy.
It’s a tautological circular logic statement that doesn’t say what you believe it says.
“Fantasy world Rothbardianism where no economic problem could ever exists and where people (magically!) never use credit money or FR banking exists only in your fevered mind.”
It was a “fantasy world” to conceive of a non-slave society, during the time of slavery.
We don’t need to actually observe people not being subjected to violence, before we can know that removing such violence makes them better off.
Your argument is fallacious LK. We don’t need to have Rothbardian ethics 100% across the board before we know the destructive effects that violent intervention has on market economies.
“Of course, we can speculate on how an attempt at Rothbardianism might work, on the basis of some 19th century capitalist systems, but the empirical evidence would suggest it would have credit money, FR banking, business cycles and instability of investment — just like all real world capitalist systems.”
This is not a law that makes it necessary in the future.
If emancipating slaves was immediately followed by some slaves using violence against their former masters, or even other innocent people, it does not reveal any law that emancipating slaves always has this effect.
You are naively extrapolating from the past when in the field of human action you can’t do that, for there are no constants of human action.
We learn over time.
Even if there are 99999 examples of anarchist societies turning into states, it does not prove anything with regards to any laws of social interactions that people cannot help to avoid.
LK:
What you call “approximations” of laissez-faire, are still examples of societies with states and state intervention. Those are not empirical examples of Rothbardian ethics.
” for there are no constants of human action.”
So it is quite possible that all people will suddenly stop eating any food at all tomorrow? lol.
“So it is quite possible that all people will suddenly stop eating any food at all tomorrow?”
Yes, it is possible, because it is possible for an individual to choose not to eat.
Eating is not a law of nature. Nobody eats when they don’t choose to eat. Eating has to be chosen.
Up until 1925 the country enjoyed modest growth but structural weaknesses increased inflation and the currency slowly fell (1922 L90 to £1, 1925 L145 to £1).
http://en.wikipedia.org/wiki/Economy_of_Italy_under_fascism
As we all know, currencies always lose their value under laissez faire. I smell definitional fraud here.
Haha, a “type” of laissez-faire.
A dictator cannot “implement” laissez-faire. He can only stand out of the way.
Your argument is ridiculous.
Assuming that there could be a Mussolini “type” of laissez faire, it’s not our “type” and the results cannot be blamed or associated with us. Likewise, Chile with mass murder and Chicago School policies is not our “type” and cannot be blamed or associated with us.
However, Hitler and the Nazis clearly employed the LK “type” of Keynesianism which he so proudly trumpeted.
Glad we finally settled that.
“Assuming that there could be a Mussolini “type” of laissez faire, it’s not our “type””
Bingo. There are different types of laissez faire: New Classical economics, Walrasianism, free banking, 19th century classical liberalism, Misesian classical liberalism, Rothbardianism.
“However, Hitler and the Nazis clearly employed the LK “type” of Keynesianism which he so proudly trumpeted.”
And Mussolini did the following:
From 1922 to 1925, Mussolini’s regime pursued a laissez-faire economic policy under the liberal finance minister Alberto De Stefani. De Stefani reduced taxes, regulations, and trade restrictions and allowed businesses to compete with one another.
http://www.econlib.org/library/Enc1/Fascism.html
But if we use the same type of incredibly dense NON-argument you use against Keynesians, these things must be discredited or “fascist” because Mussolini once supported them.
“Bingo. There are different types of laissez faire”
No, there is only one type of laissez-faire: Individual private property rights, where property comes into being praxeologically, through original appropriation, and/or exchange.
“New Classical economics, Walrasianism, free banking, 19th century classical liberalism, Misesian classical liberalism, Rothbardianism.”
The only laissez-faire society is one that prohibits initiations of force against person or property. This is not to say that it is 100% that way, but rather that it is regarded as such in a legal sense.
And Mussolini did the following:
From 1922 to 1925, Mussolini’s regime pursued a laissez-faire economic policy under the liberal finance minister Alberto De Stefani. De Stefani reduced taxes, regulations, and trade restrictions and allowed businesses to compete with one another.”
Reducing taxes is taxing. Reducing regulations is regulating. Reducing trade restrictions is restricting trade.
“But if we use the same type of incredibly dense NON-argument you use against Keynesians, these things must be discredited or “fascist” because Mussolini once supported them.”
It is not a non-argument to argue that Mussolini and Hitler both implemented Keynesian policies.
They cannot implement freedom. Freedom isn’t implemented. It isn’t imposed. It isn’t designed. It is what naturally arises when aggression against person and property is eliminated.
Both Mussolini and Hitler initiated aggression against person and property, in ways that included Keynesian activity.
Neither “implemented” freedom. They only used force here rather than there, and where they did not use force, the civilians “implemented” their own economic plans with each other.
“Both Mussolini and Hitler initiated aggression against person and property, in ways that included Keynesian activity.
Neither “implemented” freedom. “
We are not talking about freedom in a political and civil rights sense. Nobody denies that both regimes were politically authoritarian.
We are talking about the question whether a dictator can reduce the amount of government intervention in, or control over, an economy, e.g., reducing the level of taxes, tariffs, government spending, regulations.
The answer is a clear “yes.”
Your evasive, fallacious rubbish is an attempt to deny the obvious.
Under MF’s hare brained nonsense, China cannot have had any degree of market liberalisation whatsoever since, say, 1980, because, you know!, China is run by a dictatorship.
Just watch MF have an epileptic fit as he jumps in to answer that last comment.
It will be awesome entertainment value.
“War Is Peace.” — George Orwell, 1984
“Reducing taxes is taxing. Reducing regulations is regulating. Reducing trade restrictions is restricting trade. “ — MF, May 2013
MF just illustrated the theme of Bob Murphy’s post beautifully!!
We’re now at the point where he can redefine words to mean the opposite in doublespeak.
Either that or he’s a secret opponent of Austrian economics and all this entertaining garbage is done to sabotage other libertarians here!
LK:
“We are not talking about freedom in a political and civil rights sense.”
There is no difference between civil liberties and economic liberties.
Economics encompasses ALL human action, autistic, and interpersonal.
“Nobody denies that both regimes were politically authoritarian.”
Yet you’re claiming authoritarians are “implementing laissez-faire”, a rank contradiction.
“We are talking about the question whether a dictator can reduce the amount of government intervention in, or control over, an economy, e.g., reducing the level of taxes, tariffs, government spending, regulations.”
No, we’re talking about laissez-faire, not interventions that are smaller than some random, arbitrary standard, either the day before, or reference to full totalitarianism.
What you’re doing is anchoring bias. You’re taking the non-laissez faire that existed, and claiming that because there is some even more authoritarian conception, that we can call the less authoritarian one “laissez-faire.”
“The answer is a clear “yes.”
No, the answer was always no.
“Your evasive, fallacious rubbish is an attempt to deny the obvious.”
Your fallacious garbage has already been refuted.
“Under MF’s hare brained nonsense, China cannot have had any degree of market liberalisation whatsoever since, say, 1980, because, you know!”
Liberalization is not the same thing as laissez-faire. Liberalization is a process. Laissez-faire is a state.
An authoritarian can reduce his authority, while remaining authoritarian, but that’s not laissez-faire policies. That’s still authoritarianism. It’s still intervention. It’s still non-laissez-faire.
LK:
Except you’re the one being Orwellian.
You’re actually claiming that dictatorships and laissez-faire are mutually compatible.
Authority that is less than the master mind-controlling the slave, is the master “implementing” laissez-faire policies.
You are butchering the meaning of laissez-faire as a reaction against the plain fact that Hitler and Mussolini actually implemented Keynesian ACTIVITIES. They didn’t just sit back and let Keynesianism happen. No, they had to positively act to bring Keynesianism about.
That’s what you are avoiding.
That’s what you are desperately hand waving away and hoping that we talk only about how dictators act to create laissez-faire, a contradiction.
Hitler and Mussolini were economic Keynesians, and in no way whatsoever “laissez-faire”. Zero. None.
“War Is Peace.” — George Orwell, 1984
“Liberalization is not the same thing as laissez-faire. Liberalization is a process. “
Sheer genius!
So if Ron Paul was elected and enacted massive changes — liberalising the US economy — it would not even be a strong movement towards laissez faire?
MF’s head exploded.
And, we can analyze the effects of their violent activity, and conclude that people could have been better off if that violence was not initiated, even if we have zero access to any historical example of 100% peaceful societies.
“Mussolini actually implemented Keynesian ACTIVITIES.”
(1) never denied that Hitler’s government implemented fiscal expansion or said that Hitler was laissez faire. You’re making things up. Again.
(2) but Mussolini’s fascist government pursued a liberalisation of the Italian economy from 1922 to 1925. That is plain fact.
Just as the Chinese dictatorship liberalised China’s economy after 1980. Another plain fact.
“So if Ron Paul was elected and enacted massive changes — liberalising the US economy — it would not even be a strong movement towards laissez faire?”
You’re changing your argument now.
You’re no longer saying “laissez-faire policies”. Now you’re saying “movement towards laissez-faire.”
Those are different.
Yes, if any politician, Mussolini, Hitler, or Ron Paul, reduce their aggressions, then that is a movement towards laissez-faire. But it’s not laissez-faire because there is still aggression!
By your (initially) warped logic, if an abusive individual beats their spouse 3 times a week instead of 5 times, then according to you, the spouse “implemented laissez-faire.” No, they did not. They reduced their aggression, which is a movement towards laissez-faire, but it’s still not laissez-faire precisely because there is still agression.
A person who initiates aggression by trade (dictator) cannot “implement laissez-faire”. They can only reduce their aggression, towards zero, but never exactly zero or else they could no longer be called a dictator.
LK’s head is mush.
LK:
(1) Never claimed you did deny it. Just want to rub it in your face.
(2) Mussolini enacted authoritarian, non-laissez faire activities. Reducing his aggression in certain areas of the economy is a movement towards laissez-faire, but it’s not “implementing laissez-faire” as you originally claimed, but have since backed away from, and are now claiming that there was “movement towards.”
That “movement towards” was all I wanted to make clear.
“Yes, if any politician, Mussolini, Hitler, or Ron Paul, reduce their aggressions, then that is a movement towards laissez-faire. “
Ah ha!!
So fascists and dictators can engage in a “movement towards laissez-faire”!
The only issue left is just your idiot denial that “laissez faire” can be used of free market system other than Rothbardtopia flying unicorn land where police torture and (according to your last insane ramblings) “revenge” torture is all the rage.
Gotta love that freedom!!
“So fascists and dictators can engage in a “movement towards laissez-faire”!”
LOL, you’re saying this like you have always been saying this.
I corrected you on this. You initially claimed that dictators can “implement laissez-faire.” No, they cannot. They can only ever reduce their aggressions, while still “implementing” aggressive activities, including Keynesianism.
“”laissez faire” can be used of free market system other than Rothbardtopia”
That isn’t laissez-faire. That is violating laissez-faire.
“where police torture and (according to your last insane ramblings)”
It’s not insane to torture someone who planted a bomb in order to save one’s family.
““revenge” torture is all the rage.”
This is why you better be sure.
“Gotta love that freedom!!”
Freedom of the victims.
It’s not freedom to have people blow innocent people up.
I don’t see you complaining about real world torture by states, BTW. You only get your panties in a twist at the theoretical scenarios I have told you about.
Fake crocodile tears. That’s you.
And the last issue left is simply that degrees of laissez faire economies can and have existed in the past.
19th century capitalist systems in, say, the UK or the US onwards were a reasonable type of “laissez faire” economy. That is how all economists understand those eras, even Rothbard:
“Laissez-faire was, roughly, the traditional policy in American depressions before 1929. The laissez-faire precedent was set in America’s first great depression, 1819, when the federal government’s only act was to ease terms of payment for its own land debtors. President Van Buren also set a staunch laissez-faire course, in the Panic of 1837. Subsequent federal governments followed a similar path, the chief sinners being state governments, which periodically permitted insolvent banks to continue in operation without paying their obligations.[1] In the 1920–1921 depression, government intervened to a greater extent, but wage rates were permitted to fall, and government expenditures and taxes were reduced. And this depression was over in one year — in what Dr. Benjamin M. Anderson has called “our last natural recovery to full employment.”
Laissez-faire, then, was the policy dictated both by sound theory and by historical precedent. But in 1929, the sound course was rudely brushed aside.
http://mises.org/daily/2902
“degrees of laissez faire economies can and have existed in the past.”
Duh.
“19th century capitalist systems in, say, the UK or the US onwards were a reasonable type of “laissez faire” economy.”
They still had interventions, they still had price distortions, they still had non-market money systems.
Or perhaps Rothbard was a vicious, lying statist, who butchered the meaning of “laissez faire”!?
Do tell!….
I got you to change the way you argue, from “implementing laissez-faire” to “towards laissez-faire.”
We’re done.
You used laissez-faire deceitfully, Rothbard did not.
At the very least, you and Rothbard are using the term “laissez-faire” differently.
Every time you address either myself or Roddis using the term, you restrict the meaning to “Rothbardia”.
I’m sure Rothbard would think that what he was describing wasn’t anarcho-capitalist.
“I’m sure Rothbard would think that what he was describing wasn’t anarcho-capitalist.”
Correct! And I’ve made it clear above that I regard “laissez faire” as capable of referring to different free market systems — just as Rothbard is using the term here.
But now you’re dishonestly trying to claim I have asserted above that Mussolini implemented a Rothbardtopia.
Your whole rubbish above has collapsed.
Not sure Rothbard would have used “laissez-faire” and Hitler in the same sentence, LK.
And you’re the one who kssp bringing up “Rothbardia”, as if we need to observe only peace everywhere before we can know the effects of violence, e.g. Keynesianism.
So you’re saying that a dictator could NEVER privatise nationalised industries, reduce tariffs, reduce regulations, reduce government spending and
balance the budget?
Dictators cannot do anything regarding laissez-faire in terms of activity. They can only step out of the way. Freedom is “implemented” by each individual when violence against them is reduced or eliminated.
Reducing spending, reducing taxes, reducing regulations, these are…spending, taxing and regulating. They are not laissez-faire. Laissez-faire literally means “let do”. You cannot “let people do” when you are initiating aggression against them.
“Reducing spending, reducing taxes, reducing regulations, these are…spending, taxing and regulating. They are not laissez-faire.”
lol. We’ve heard everything now!
Words are now to be defined as the exact opposite of their meanings.
It’s not controversial.
Laissez-faire means hands off, not hands on but a little less than before.
“Debating” LK and the Keynesians is like a never-ending game of Whack-a-Mole.
http://3.bp.blogspot.com/-2nqdUt7yhfA/T67JXtY9p3I/AAAAAAAAANA/gNB_AXp-1io/s1600/whack-a-mole2.jpg
LK is a veritable broken record. The same fallacious claims over, and over, and over, and over, and over again, as if repeating them enough times makes them true.
“Rothardian Utopian nonsense, therefore you cannot know if initiating violence makes people’s lives worse off.”
It’s asinine.
If North Korea allows its peasants an extra scoop of rice, then LK will argue that they’ve implemented Laissez-faire. To him, anything less oppressive is full Laissez-faire. So can we say violent and authoritarian is then MORE Keynesian?
Man, is there any Keynesian that can make a coherent argument? So far I’ve seen none that can.
My goodness. I was going to make that same point. I was going to call it the “sky-blue-pink” type laissez faire (color coded) where peasants were finally allowed to own 1 square yard of land and grow no more than 3 tomato plants with no more than 20 tomatoes per year for a family of eight. Grow more than that and you are a Kulak and your entire family goes down the disposal, toddlers first.
And that counts against us, just like Hitler the Keynesian counts against LK. So now we’re all even.
Here’s the double standard that I find irksome on FA. If LK or DK says something about Austrianism that people don’t like we hear shouts that Austrianism is a positive not a normative theory. Well so is Keynesianism. But the same chorus here invariably portrays Keynesianism as normative not positive.
Keynesian economics, or Keynesian politics?
Keynesianism isn’t immune from politics, since it presupposes specific norms of behavior, such as deficit spending, central banking, states, etc.
Austrian theory presupposes no such ethic.
You’re confused.