Potpourri
==> Mario Rizzo on libertarianism vs. classical liberalism.
==> James Caton Jr. has some problems with the Hayekian triangle.
==> Tabarrok vs. Cowen on immigration. Winner: Tabarrok.
==> Pamela J. Stubbart explains the difference between living in suburbs and a big city.
==> A good interview with me on hard-core voluntary society stuff. I am not sure exactly where I come in; I’m definitely in the middle third if you want to move the pointer around.
==> Free Advice reader David Mahler has published a short volume on his transition from evangelical Christianity to agnosticism.
==> Why don’t commercial planes have parachutes for everybody? Thinks look like a job for marginal analysis!
==> Kind of old news at this point, but the Jeopardy guy Arthur Chu has some neat (but in retrospect obvious) strategies, including playing defense on Daily Doubles.
==> William F. Buckley Jr. dismissed libertarians as focusing on the demunicipalization of garbage collection while he and the other conservatives contained the communists. OK, if you aren’t sure about Buckley’s judgment, try this quote from 1964:
The Beatles are not merely awful; I would consider it sacrilegious to say anything less than that they are god awful. They are so unbelievably horribly, so appallingly unmusical, so dogmatically insensitive to the magic of the art that they qualify as crowned heads of anti-music, even as the imposter popes went down in history as “anti-popes.”
(I think he also wrote that Princess Diana was the most beautiful woman who had ever been photographed, but I can’t find that now.)
That Buckley, what a knee-slapper. I bet he even thought Mozart Was A Red, not anti-music but anti-life!
On the subject of “Potpourri”, James Dellingpole has moved to Breitbart so he no longer needs to pretend to be polite to anyone… which seems to be working for him.
http://www.breitbart.com/Columnists/James-Delingpole
Re: James Caton Jr…
1) Empirical history shows relative changes in prices, just like the Austrians explain:
http://research.stlouisfed.org/fredgraph.png?g=smf
2) Neither full employment nor full resource usage are necessary in real life for the effects of credit expansion to do what the Hayekian triangle suggests. What Caton Jr. is doing, as all those partial to the Keynesian story, is assuming that inflation and credit expansion affects only unemployed worker wages and labor allocations and only affects idle resource prices and allocations, first, before more inflation and credit expansion start to affect already employed and already utilized resources. That is an incorrect assumption, because in reality we see relative and absolute prices of already employed workers and we see relative and absolute prices of already utilized resources, change over time in response to inflation and credit expansion.
When you think about it, it is absurd to believe that the existence of unemployment or idle resources changes the fundamental effects explained by the Austrians. When a bank is flushed with new funds from the Fed, who in their right mind would believe that they would use those funds to either only hire currently unemployed workers, or invest only in idle resources, and would only start lending and investing in employed workers and utilized resources once full employment and full resource utilization is reached? It is insane! The Federal Reserve affects interest rates by inflation and credit expansion regardless of how many people are unemployed and regardless of the extent of idle resources!
My guess for why this fallacy keeps creeping up again and again, is that these Keynesians just can’t think outside the Keynesian box. To them, the only thing that we have to be “concerned” about with inflation is price levels. It’s as if price level changes are the only thing that affects an economy’s capital structure or labor allocations.
The reason why Hayek assumed full employment is not because ABCT does not occur with less than full employment, but rather, he wanted to make clear the importance of capital and labor reallocations in the presence of distorted interest rates. By assuming full employment, he could more easily explain the relative reshuffling of capital. With less than full employment, the ABCT relative reshuffling still takes place, but Hayek would have had to include an additional analysis of exactly where in the triangle any newly hired or newly “sprung to life” capital goods would be allocated. It would not have added any value to the analysis. At best, we would be reasonable in assuming that any newly hired workers and any newly utilized resources, would be allocated according to the Hayekian triangle changes. Artificially low interest rates are the cause anyway! Instead of existing workers going from less to more capital intensive projects, previously unemployed workers would be allocated to more capital intensive projects, which still brings about the relative distortions and unsustainable configurations between lower and higher stages of production!
3) Caton Jr. conflates knowing aggregate price levels with knowing that relative price difference between stages of production change with inflation and credit expansion. We don’t have to know what any price levels are in order to know that relative prices change and that these changes are associated with relative capital and labor readjustment.
Caton Jr. approvingly quotes Hawtrey, who writes:
“It is quite likely that the additional investment will be predominantly in the earlier stages, but it is not necessarily so. It might happen that the next most remunerative openings for investment are mainly or exclusively among the later stages. There is no necessary connection between the margin of investment and the stages.”
This is not a refutation. This is just taking ABCT and effectively claiming “It is likely ABCT is true, but it is not necessarily true.”
Well, OK, but why isn’t it necessarily true on this point? Sure, modern Austrians already know that credit expansion can expand consumer goods at the expense of early stage capital goods. Consumer driven booms are ABCT booms. During Hayek’s life, consumer loans were not popular. So of course the classic ABCT would tell a story about early stage capital expansions. But that doesn’t mean ABCT is “useless” in explaining credit financed consumer goods booms. The principles of Austrian theory enable us to trace back any unsustainable boom type back to the source. We can have all sorts of capital distortion schemes. Early capital stages expanded at the expense of later stages, or vice versa. Consumer goods expanded at the expense of capital goods, or consumer goods expanded at the expense of early capital goods stages, or late stage capital goods, etc, etc.
The take away is that the economy has a temporal structure. All the stages have to be “in sync” with every other stage. We can’t just arbitrarily expand one stage at the expense of all others such that the expanded stages require more complimentary resources from the non-expanded stages than workers and capitalists in those stages can provide. If an economy is to have an expanded early stage, then there has to be enough complimentary resources released or newly produced by the other stages. If the Fed distorts interest rates and misleads investors into investing relatively too much in the early stages, then in theory it could be sustainable, but only if for some reason there are increased savings and reduced consumption as well. But we already know that consumers do not suddenly reduce their consumption and increase their savings in response to, and perfectly offsetting to, the early stage expansion brought about by the Fed’s tampering. It never happens, and it makes sense why. If it did happen, meaning if people saved more voluntarily, then there wouldn’t be a boom and bust cycle in the first place. But there is, so….
“The take away is that the economy has a temporal structure. All the stages have to be “in sync” with every other stage. We can’t just arbitrarily expand one stage at the expense of all others such that the expanded stages require more complimentary resources from the non-expanded stages than workers and capitalists in those stages can provide. If an economy is to have an expanded early stage, then there has to be enough complimentary resources released or newly produced by the other stages.”
lol.. and yet you say that the full employment assumption is not necessary for the theory… then suddenly it is.
More violation of the law of non contradiction.
The sentence you have highlighted merely means that it is impossible for any closed group to invest unless it produces more than it consumes. This remains true at all levels of employment.
A society with open borders can of course borrow from outside… up to a point, then eventually it will no longer be able to keep borrowing and the same limitation will apply.
There is no such thing as full employment. I mean that figuratively and literally. There is barely even any such thing as peak employment.
Now we know this and the theories bound to a full employment approximation as a tautology need to evolve.
There is no implied full employment assumption in that argument, LK. Nowhere is full employment assumed there.
Regardless if there is zero unemployment or 25% unemployment or any other rate of unemployment. It is true that businesses in a particular general stage in the temporal framework cannot be arbitrarily expanded without sufficient complimentary resources being released or produced in the other stages.
Just because there is resources and labor of a specific temporal association available, it doesn’t mean they can instantly be reallocated into the stages that the arbitrarily expanded stages require and depend on.
Major Freedom wrote:”My guess for why this fallacy keeps creeping up again and again, is that these Keynesians just can’t think outside the Keynesian box. To them, the only thing that we have to be “concerned” about with inflation is price levels. It’s as if price level changes are the only thing that affects an economy’s capital structure or labor allocations.”
I finally had time to read your entire thesis. It makes sense and the above portion speaks volumes. Hopefully this helps lK get over his price fetish err obsession.
I think there is also something much larger happening here with lK and his ilk. The Keynesians think they have to refute every single aspect of Austrian economics, none of it, not 1 iota can be correct because in their minds to accept 1 piece of Austrian economics is to accept all of Austrian economics. Really not much different than how Rothbardians are preoccupied with negating every single aspect of Milton Friedman.
“The Keynesians think they have to refute every single aspect of Austrian economics, none of it, not 1 iota can be correct because in their minds to accept 1 piece of Austrian economics is to accept all of Austrian economics.”
That isn’t surprising, because Austrian theory is an integrated whole. Each part is necessary for eveey other part. Deducing from action and the categories of action, reveals a single cohesive whole. To accept any of it logically requires accepting it all, for it’s all logically structured.
I reject your last comment however, where you say Austrians are trying to refute everything Friedman said. No, Austrians spend their time disagreeing with Friedman’s monetarist theories, and sometimes with his guaranteed income and withholding tax theories. But Friedman’s theory is not contradiction free. He believed in, and advocated for, mutually inconsistent ideas. We don’t have to reject all of Friedman’s work if we disagree with parts of it. In fact, you will see, if you read Austrians, that there are positive and approving passages regarding Friedman’s work.
Which reminds me…
http://research.stlouisfed.org/fredgraph.png?g=smk
Hey LK, look at how inflexible producer prices are! Sellers simply refuse to ever change prices in response to new conditions. Perfectly flat. Flexible prices is a myth. Prices do not change. We are paying the same prices today as people were paying in 1900.
“A contemptible straw man. LIES!”
PPIs generally contain a significant degree of flexprice goods, such as farm products, minerals and raw materials. So it is not remotely surprising that these indices are much more volatile than others (as pointed out by Hanes, Christopher. 1999. “Degrees of Processing and Changes in the Cyclical Behavior of Prices in the United States, 1869–1990,” Journal of Money, Credit and Banking 31.1: 35–53), especially given the historically unusual 2008-2009 recession.
It is in finished goods and services that we find a much greater degree of relatively inflexible mark-up prancing.
Your graph does not refute the statement that there are extensive fixprice markets that have relatively inflexible prices.
Inflexible mark-up pricing? What are they marking up?
ha! I misspelled “pricing” and right clicked to auto-correct but clicked the wrong word.
Businesses mark up total average unit costs calculated at either (1) a projected, estimated level of sales or (2) given level of production output in a particular period.
I ask again: have you embraced debt deflation?
What are you even talking about?
Your incoherent, random remarks are bad even for a blog where one expects such things.
Guys, c’mon. LK I realize people are rude to you as well, and I will try to police that too, but let’s all chill out, OK?
http://en.wikipedia.org/wiki/Debt_deflation
This is why 8 bankers and many more will take the plunge.
So the costs to the business (such as farm products, minerals and raw materials) are volatile prices that can be quite variable. Multiply those by a constant markup and you get a fixed price ?!?
It’s been a while and my memory is fuzzy but there used to be some other sort of math once long ago.
(1) Not all mark-up pricing businesses use farm products, minerals and raw materials. Indeed, a lot of manufacturing firms and services will be using finished goods. So your argument does not work there.
(2) Even those that do use raw materials will generally have fixed costs that constitute a large percentage of total average costs: e.g., many US firms have fixed costs as high as 40 percent of total costs (the average found by Blinder, A. S. et al. (eds.). 1998. Asking about Prices: A New Approach to Understanding Price Stickiness. Russell Sage Foundation, New York. p. 105, 302).
As output rises with higher sales, average unit fixed costs fall, often
balancing variable cost changes or even allowing total average unit costs to fall.
The empirical evidence confirms time and again that a great many firms have flat or falling cost curves
E.g., Eiteman and Guthrie (1952)* was a survey of 334 companies to find what their cost curves looked like, and they found a stunning 95% of managers chose cost curves with constant or falling costs.
over 40 years later Blinder et al. (1998) conducted much the same type of survey, which involved 200 US firms in a sample that should be representative of the US economy at large: Blinder found that about 40% of firms reported falling variable or marginal cost, and 48.4% reported constant marginal/variable cost (Blinder 1998: 102).
But, then, like others here perhaps you think empirical evidence never proves anything, Tel?
*Wilford J. Eiteman and Glenn E. Guthrie, “The Shape of the Average Cost Curve,” The American Economic Review 42.5 (1952): 832-838.
Sounds like even more reason to believe that per-unit costs are variable, therefore after multiplying by a fixed markup the final sell price will also be variable.
What are these fixed costs anyhow? Electricity… hasn’t exactly stayed constant. Rents might be fixed for a few years by contract, but if you look at the market as a whole rents change substantially over time, and also depending on the area. Labour costs can also change as people are hired and fired, parts of the process go offshore, etc.
Then there are plenty of firms that have variable markup, and then there’s individual tenders for projects which include all sorts of other factors. Beyond that salespeople get discretionary discounts in most firms and branch managers are allowed some discretion, and we have seasonal sales, stocktake sales, and various specific promotions.
Sure, they answered a survey, and then next week their electricity bill goes up what do you think will happen?
[A] well we told the survey guy that our costs were fixed so we can’t adjust to higher electricity prices.
[B] forget what we said in the survey, this is now.
Sure, the empirical observable prices do fluctuate. Survey results do not override actual prices.
http://www.huffingtonpost.com/2012/08/15/iphone-sell-iphone-5_n_1772902.html
There’s a chart of the iPhone-4 price as the introduction of a new model pushed down the resale value from $250 all the way to $150.
Seems kind of variable.
(1) “Beyond that salespeople get discretionary discounts in most firms and branch managers are allowed some discretion, and we have seasonal sales, stocktake sales, and various specific promotions.”
This happens to some limited degree in some firms.
But changes in a markup do refute the existence of mark-up pricing. lol..
Nor are such prices market clearing prices in the conventional sense.
(2) as for “fixed costs” rising, yes, they can and do, but you clearly do not even know the correct meaning of the term “fixed costs”:
“Fixed costs are not permanently fixed; they will change over time, but are fixed in relation to the quantity of production for the relevant period. For example, a company may have unexpected and unpredictable expenses unrelated to production; and warehouse costs and the like are fixed only over the time period of the lease.
By definition, there are no fixed costs in the long run, because the long run is a sufficient period of time for all short-run fixed inputs to become variable. “
http://en.wikipedia.org/wiki/Fixed_cost
_______________
But in the long run the average firm is increasing output and its average unit fixed costs are falling even with some rises in some fixed cost components.
You’re ignorant and hapless, Tel.
LK,
Price adjustments are not limited to “relevant periods” only.
It is not a requirement in the free market theory of prices that prices must adjust within a definite, explicit, period of time.
The “relevant period” is indefinite. If prices don’t adjust “this” period in response to demand changes, then they will adjust in the “next” period. At some point they will change, because of the change in investment and hence costs and hence mark up prices based on costs.
Just because it isn’t as fast you personally prefer, it doesn’t justify theft and violence against innocent people.
In a short enough time period all prices are fixed. Then again in a short enough time period all motion is impossible.
Zeno’s Paradox vs Austrian Economics.
No one disputes the existence of a markup.
If a business is making a profit, then it must be pricing more than costs so a markup exists! You are hardly going to refute the core of Austrian Economics by coming to the startling discovery that business owners are making profits.
Oh yeah, that’s right, we were talking about whether prices are fixed, I remember now.
Ummm, on that note, variable costs with variable markups imply variable prices. Ask your calculator if you think I’m being tricky here.
13 APR 2013:
05 OCT 2013:
19 NOV 2013:
Hopefully you remember what we are talking about… whether prices are fixed or variable, and whether business can adjust prices to optimise profits.
By you own admission both costs and markup are variable. So you can stop banging on about it now.
Tel,
Your statement:
“Oh yeah, that’s right, we were talking about whether prices are fixed, I remember now.
My statement:
Your graph does not refute the statement that there are extensive fixprice markets that have relatively inflexible
prices.
———
Notice that word “relatively”?
That you resort to plain lying like MF shows what depths of dishonesty and desperation you’re plumping.
I for one am contented that LK is now no longer making the absolutist arguments about flexible/inflexible prices.
Now he’s using language such as “generally speaking”, and “relatively.” This is of course his way of finally agreeing that the market process does result in changed prices in response to changed demand (and supply).
Sure, it doesn’t occur right away, since it takes time for people to learn and adapt to each other, to learn and adapt to changes in other people’s preferences, but the main point is that there is no permanent barriers preventing individuals from adjusting their asking and bidding prices in such a way that there is no social or external reason why every individual can’t eventually find a spot in the division of labor and gain through trade.
If we can find ways to quicken the process, PEACEFULLY, then those should be, and likely will, be utilized.
At no time has LK ever shown that it is justified for one person, or one group of people, to point their guns at another person, or another group of people, so as to reduce certain statistics that are desirable in being reduced.
“I for one am contented that LK is now no longer making the absolutist arguments about flexible/inflexible prices.”
No, such “absolutist” claims were ever made by me.
They’re a figment of your fevered imagination as you desperately try and lie to win by distorting an opponent’s position yet another stock in trade for you.
As noted below, the reality of real world prices is found again in again in empirical studies.
E..g., Hall, Walsh, and Yates (2000) report the results of a survey of 654 UK companies in 1995.
Firms were also asked: what happens when there is strong demand and this cannot be met from inventories or stocks?
The result was as follows:
Increase overtime | 62%
Hire more workers | 12%
Increase price | 12%
More capacity | 8% (Hall, Walsh, and Yates 2000: 442).
Continue living in your fantasy world of lies and straw man arguments, MF.
Ok, so you accept that price signals do exist, and you also accept that prices do change in response to events in the market.
Since “relatively” implies a comparative relation between what we observe and some other thing, and since you have not provided any reference, you make it impossible for anyone to quantify what “relatively” implies here.
Thus you believe that Austrian Economics requires prices to change more rapidly and in bigger steps than some special threshold.
Maybe your theory would carry more weight if you explained to people what this key threshold is, and how you discovered it? Just putting that out there.
“and you also accept that prices do change in response to events in the market.”
You are serially incapable of understanding what was said to you time and again:
(1) mark-up prices — which, depending on the given country, account for between 54% to 70% of prices in modern market economies — are not generally speaking flexible in the way required by price theory as determined by strict dynamics of supply and ***AND demand**, nor set to clear markets
(2) when they do change they tend generally to change because of changes in total average unit costs or changes in the levels of the mark-up.
That has ALWAYS been my position.
The reality of (1) severely undermines much of Austrian theory, which requires a strong real world tendency to flexible prices and market clearing in product markets.
http://socialdemocracy21stcentury.blogspot.com/p/there-is-mountain-of-empirical-evidence.html
LK:
2 does not undermine 1.
Bohm Bawerk for example understood quite well the role of costs of production in price formation.
Also, as Reisman explains in detail, pricing determined by costs of production is a corollary of the law of marginal utility (a law which Menger, the first “Austrian”, co-discovered), and the law of supply and demand.
Austrian theory does not hold the blanket statement that costs never play any role in pricing, nor is its principles incapable of explaining cost plus profit pricing.
It is Austrian theory that is the best, if not only, theory that can explain what you call “fixed pricing”. Competing schools use flawed premises such as assuming every firm is identical, and the flaw that efficient pricing can only exist with MR=MC. Austrians have exposed these flaws, which are flaws you continue to presume in your anti-capitalist attacks.
At any rate, you’re not anti-Austrian as much as you’re anti-laissez faire, which means you are not going to refute the people you’re debating, by focusing only on orthodox Austrianism. You have to deal with far more than that, which, expectedly, you won’t do.
And furthermore, nobody said mark-up prices are totally inflexible. This is just a straw man.
Mark-up prices tend to move upwards **if** total average costs rise and are expected to remain at this new level, and if the firm and its competitors decide to adjust prices to maintain profits.
Someone has done an empirical study on airline ticket prices.
http://saintamh.org/apps/airlines/
There’s charts of the variability he has discovered.
The the Australian Treasury charting petrol prices (adjusted for inflation, into 1990 dollars or something like that).
http://fueltaxinquiry.treasury.gov.au/content/Submissions/Government/images/Treasury_326-4.gif
Do you think fuel prices might be a cost to business? Just putting that out there.
There’s a chart of hard drive pricing on a per-bit basis. Not sure if it’s adjusted for inflation but the exponential change in technology is dwarfing even government money printing.
http://ns1758.ca/winch/cost-hard-drives-komorowski.jpg
Now, how many businesses out there use a hard drive? Hmmm, all of them I think.
(1) we’re back to the point I made above: nobody said mark-up prices are totally inflexible. This is just a straw man.
(2) Since no Post Keynesian denies the existence of flexprice markets, but only how extensive they are, all your examples do not refute the empirical evidence on the existence and extent of mark-up pricing.
Which is another way of you saying you agree that the market process of price formation tends towards clearing.
As soon as you say prices are not perfectly inflexible, then you have conceded the entire debate, for Austrians have never said prices instantly change, or change within seconds or minutes. They have only always said that prices tend towards clearing, which you now agree is true.
“Which is another way of you saying you agree that the market process of price formation tends towards clearing”
lol. No, it isn’t.
And it is fascinating that your sole tactic is now simply to pretend your opponent simply agrees with you.
No pretense of argument. Just bizarre brazen lies.
LK:
Yes, it is. If you acceptthat prices are not perfectly inflexible, then you have, whether you understand it or not, accepted that prices adjuat towards clearing. Prices do not adjust away from clearing. The very drive of price adjustments is individual seeking of gains ans avoidance of losses. That is both necessary and sufficient for the adjustments to be tending towards full employment, not zero employment, and full output, not zero output.
It is not necessary for you to consciously accept prices adjusting towards clearing, all you had to do was admit the trivilaity that prices are not perfectly inflexible.
This ian’t a “tactic”, it follows from what you have conceded.
Again, at this point you have already accepted the entire debate to your opponents. Now it’s just a matter of you dealing with all the contradictions.
This is such an excellent formulation of an extremely basic libertarian insight (one that I have repeatedly presented to LK without any response):
Dumb Consumers Make Infallible Voters by Ryan McMaken
In a recent Mises Daily article, Julian Adorney noted that a central tenet of the gospel of social democracy is that the majority of the people are too stupid to buy or consume the “correct” products and services without government diktat, but that when it comes to voting, the opinions of the majority are infallible and never to be questioned.
http://www.lewrockwell.com/lrc-blog/dumb-consumers-make-infallible-voters/
This analysis also goes to the entirety of the Keynesian hoax and to socialist democracy in general. People are too stupid and oblivious to manage their “aggregate demand” etc. but are geniuses when it comes to voting for the proper omniscient overseer to “direct” them properly in all aspects of their miserable ignorant lives.
“Julian Adorney noted that a central tenet of the gospel of social democracy is that the majority of the people are too stupid to buy or consume the “correct” products and services without government diktat, but that when it comes to voting, the opinions of the majority are infallible and never to be questioned.”
Adorney’s paragraph is a tissue of falsehoods from beginning to end.
(1) People are not infallible in their voting habits.
I know of no Post Keynesian/social democratic poltical theorist who has ever said any such thing.
Care to name one? And even if you did he/she would obviously be a bizarre anomaly, atypical of political theory as held by left liberals/social democrats.
And certainly voters can hold incorrect ideas about economics/social policy or immoral ideas, etc. Just look at people who vote for Ron Paul.
(2) Aggregate demand failures are not caused by people being “too stupid to buy or consume the ‘correct’ products and services without government diktat”.
AD failures are about unintended harmful aggregate consequences of individual micro behaviour that may well be intelligent or rational, e.g., a person cutting consumption and increasing savings to pay down excessive debt is no doubt smart at the individual level, but when enough millions do it, it causes consequences unintended by individuals such as crashing aggregate output and employment.
(3) the research by behavioral economics on consumer behavior cited by Adorney simply presupposes that neoclassical decision theory IS the right standard of rationality, something which Post Keynesians and other social scientists dispute, so it’s irrelevant to heterodox Keynesian theory.
AD failures are about unintended harmful aggregate consequences of individual micro behaviour that may well be intelligent or rational, e.g., a person cutting consumption and increasing savings to pay down excessive debt is no doubt smart at the individual level, but when enough millions do it, it causes consequences unintended by individuals such as crashing aggregate output and employment.
You stick with that. It’s a winner.
LK:
1. Your response essentially verifies what I had said.
2. ALL Keynesian analysis meticulously ignores investigating whether your alleged “AD failures” might have been caused by prior violent interventions as opposed to a lack of violent intervention as you have described it.
AD failures are about unintended harmful aggregate consequences of individual micro behaviour that may well be intelligent or rational……. but when enough millions do it, it causes consequences unintended by individuals such as crashing aggregate output and employment.
No matter how the meaning of this claim is spun, it says that average people lack the wisdom to recognize this alleged “aggregate” phenomenon, but that LK has such wisdom. The implication for socialist democracy is that these quite un-wise folks (who cannot even recognize “basic macro” concepts) are, at the same time, brilliant enough to select their violent overseer who will put things right.
“No matter how the meaning of this claim is spun, it says that average people lack the wisdom to recognize this alleged “aggregate” phenomenon”
No, it doesn’t, roddis: people easily recognise a recession or depression.
It is based on objective criteria: a period where real output falls for 2 quarters or more, and when unemployment rises.
Perhaps it’s only you who are too thick to recognise what a recession is.
But only after they weren’t wise enough to spend enough to avoid the depression. They need people like you and DK to tell them the correct ratios that increase output and employment in to perpetuity.
That would be an objective Nominal GDP figure, adjusted by and objective calculation of inflation, right?
So let me see, the GDP calculation includes mark-to-market gains, but only when they are gains, if the market should be falling then mark-to-market gets suspended… uh huh, that’s objective.
The GDP also includes research and development expenditure that companies write off their taxes… because valuable intellectual property is being produced there. In this case no one even attempts to mark-to-market the value of the IP is exactly whatever you spent.
http://economistsview.typepad.com/economistsview/2013/04/we-are-essentially-rewriting-economic-history.html
Needless to say, the arbitrary adjustments to the GDP calculation are only imposed when debt-to-GDP needs to look a little better. Then there’s the inflation calculation to look into… which is a even bigger objective can of worms.
people easily recognise a recession or depression.
What a dodge. The issue here is the CAUSE of recessions and depressions. Further, average people surely do not generally think in terms of either Keynesian or Austrian analysis regarding how their individual activity is going to impact future recessions and depressions.
You are absolutely against all other forms of society. To be absolutely in defense of democracy is tantamount to saying the majority is never wrong, or else you be an advocate for the occasional wrong, which I doubt you will do consciously and purposefully.
But we know deep down that you aren’t really in favor of democracy. Nobody is actually. You’re only using democracy to communicate your beliefs that have a grounding on something *other* than democracy, to give them a flavor of public acceptance and credibility.
For if the majority voted to abolish Keynesianism in politics, then surely you would be against it, regardless of what you say outwardly to others. Or, if the majority voted to murder or rape the minority, you’d likely be against that too. It’s why you preface Democracy for the 21st century with “Social”.
You want the majority to determine what happens to the minority, except when they vote in ways you do not prefer. When they vote in ways you do not prefer, you want a dictatorship action by government.
That isn’t a harmful outcome. It is a desirable outcome, because it means existing debt levels cannot be supported by earnings in existing employment lines and existing capital structures and production methods.
Crashing aggregate demand is a good think if previous aggregate demand is too high given the existing real economy. Crashing aggregate demand is sometimes necessary to expose the extent of relative malinvestment. Falling aggregate demand does not, after all, imply falling demand for everything equally. It’s the relative changes and relative spending and relative prices that are most important.
So empirical evidence can be rejected if the theory on which that evidence is constructed is analytically (internally) flawed?
Interesting…
(1) ” It’s the relative changes and relative spending and relative prices that are most important.”
oh, yes, the mythical flexible prices and wages that smoothly and rapidly converge to market clearing levels??
(2) “So empirical evidence can be rejected if the theory on which that evidence is constructed is analytically (internally) flawed?”
False. The prior neoclassical standard of rationality used in these experiments IS very much an apriorist exercise contrary to what empirical reality tells us.
I never said I dispute the **empirical findings of behavioral studies that people generally behave in such and such a way**: only the subsequent conclusion that it is irrational on the basis of a prior and mistaken neoclassical decision making theory and mistaken standard of rationality.
1. Prices and wages have no volition. Humans are as flexible as they need to be under the circumstances to alter and effectuate their plans.
2. I’ve heard stories of starving people selling their children. That counts as “flexible” doesn’t it?
3. I’m a big fan of LK’s earlier much more sophisticated obfuscation regarding and distortiong of the 1975 Hayek quote. This “fixprice” stuff is just so dumb. It is a total Keynesian surrender. LK can argue this line to the public until the cows come home.
I finally get it! It is because prices are so inflexible that they collapsed in 2008 and required massive government intervention to artificially boost them up again. How could I have ever missed that?
Roddis:
No no no no, don’t you get it? CONSUMER prices are Gods. Those prices cannot, never, ever decrease. The most we can tolerate is a reduced rate of growth. But even that is evil.
Of course, the fact that consumer prices did change in response to the changed demand in 2008 is not evidence to LK.
http://research.stlouisfed.org/fredgraph.png?g=soA
Not evidence Roddis! Even consumer prices are fixed.
Oh, excuse me, they are “generally” fixed. I need to rescue my crap theory by using dubious language so that I can hold both flexible prices and inflexible prices as what occurs.
Hahahaha
(1) “Prices and wages have no volition.”
Correct. But only a fool would interpret what I said above as saying that “prices and wages have volition of their own”.
(2) oh, and Roddis you never answered the question:
Is Hayek thinking of a tendency towards supply and demand equilibrium in goods and labour markets by flexible prices and wages, moved by market agents in their transactions, in your Hayek passage?
Yes or no? No evasions.
And no violation if the law of non-contradiction (as in some stupid reply like “he is, but at the same time he is not”).
LK reminds me of a Hegelian.
He takes a thesis (his own fallacious theory that has been disproved countless times over) then he attempts to integrate the anti-thesis (the counter-arguments he cannot refute), and then instead of rejecting the original thesis, he tries to hold both thesis and antithesis at the same time as a synthesis (contradictory gobbledygook today).
This is LK in a nutshell:
“Fixed prices are not flexible they are flexible.”
“It is because prices are so inflexible that they collapsed in 2008
No, roddis, inflation occurred in 2008:
http://www.usinflationcalculator.com/inflation/historical-inflation-rates/
In 2009, from March to October there was some mild deflation, but the average for the year was just -0.4%:
http://www.usinflationcalculator.com/inflation/historical-inflation-rates/
This is hardly a “collapse” in prices.
It certainly isn’t evidence that prices suddenly become highly flexible and were adjusted to clear markets.
The point of the quote was that the present regime of intervention creates false and misleading prices. We cannot know in advance (and thus cannot measure) what the undistorted prices might be or might have been unless and until we have a regime of non-intervention.
Since there will tend to be a tendency towards supply and demand “equilibrium” in goods and labour markets by flexible prices and wages, moved by market agents in their transactions under both the distorted and undistorted price regimes, I don’t believe that is the gist of the quote.
Further, as I’ve pointed out to you 575 times before, there can be a whole barrel full of “market clearing prices” during the boom phase right up until the very moment economy runs off the cliff.
(1) So now you’re saying Hayek IS talking about flexible prices and wages that tend towards supply and demand equilibrium?
(2) “Further, as I’ve pointed out to you 575 times before, there can be a whole barrel full of “market clearing prices” during the boom phase right up until the very moment economy runs off the cliff.”
lol!!…
If there were market clearing wages and prices in the boom, then the involuntary unemployment that Hayek speaks of problems won’t arise.
Yet again you show you don’t understand basic Austrian concepts, roddis.
The context of that theory of Hayek is when there is high unemployment, which means not the boom, but the bust phase.
And again, the main source of ABCT is Mises, not Hayek. Mises is the one who developed it.
‘People are too stupid and oblivious to manage their “aggregate
demand” etc. but are geniuses when it comes to voting for the proper
omniscient overseer to “direct” them properly in all aspects of their
miserable ignorant lives.’
I suspect the more ‘realists’ of the progressivists/socialists are
deeply aware of that dissonance in their ideology. And when push comes
to shove, democracy is rapidly abandoned in favor of rule by the
technocratic vanguard. Of course, it is all temporary until the masses
are enlightened enough (through progressive education/indoctrination)
to vote the correct way.
You haven’t been paying attention to the EU version of Social Democracy. The French and the Dutch went to referendum over the “Constitution of Europe” and voted NO… but they got it dumped on them another way (without pesky referendum) as the Lisbon Treaty.
Then the Irish tried to vote NO to Lisbon but got sent back to vote again, until they got it right. You can bet that they won’t ever be allowed to vote a third time in case they change their minds.
Same thing happened in Ireland with the Treaty of Nice, they had to be sent back twice to get the right answer, but now this answer has been achieved there will be no further referendum on that matter.
Then there’s Switzerland, where those annoying citizens had the audacity to vote for Swiss sovereignty on immigration. Immediately the EU have threatened to punish them for such insolence.
http://blogs.telegraph.co.uk/news/danielhannan/100259161/the-eu-cant-afford-to-punish-switzerland/
Then there was the issue of software patents in Europe. The EU Parliament (i.e. elected representatives of the people) twice rejected the idea of software patents, and the European Patent Convention specifically excludes software from patentability. The upshot of this is (as you might expect) the European Patent Office is happy to accept software patents because their interpretation of the law is the exact opposite of what the words say, and anyway the EU Council likes the idea.
Ryan McMaken has not found a hole in the logic of Social Democracy, merely that they give lip service to Democracy out of necessity but have no intention of taking the voter seriously now, nor ever.
“It is in finished goods and services that we find a much greater degree of relatively inflexible mark-up prancing.”
Prices set in accordance with costs of production are flexible to the degree that costs of production are flexible. A company that experiences a reduced nominal demand will of course tend to reduce nominal investment, which puts downward pressure on factor inputs, which then enables cost plus profit prices to fall.
Furthermore, there are prices WITHIN that PPI that are set in accordance with costs plus profits as well. These are all the half-finished and other manufactured input goods that businesses use to produce their particular goods.
Your claim that “administered” prices do not adjust in response to demand is false. They do in fact respond to changes in demand. They do so by way of the effects of demand changes on investment and hence costs and hence prices set in accordance with costs. Demand changes do not have a direct effect on prices, in order for the argument that prices adjust in response to demand to be true.
“Your claim that “administered” prices do not adjust in response to demand is false”
Yes, MF, we know you are a serial liar at work.
I have NEVER said administered NEVER change or are eternally fixed, or that they do not change in response to total average cost changes, or exceptionally in response to demand.
Your laughable lies demonstrate how you’ve lost this debate ages ago,
What has been asserted is that mark-up prices are ***generally speaking*** not responsive to demand in the way postulated by any pricing theory explaining prices as caused by the dynamics or supply **and demand**.
Therefore they are not generally adjusted in a flexible way to clear markets, and do not *generally speaking* tend to market clearing levels,
You once again concede the argument that prices change in response to demand.
Your attempt to square the circle with “generally speaking” is quite funny to read.
In addition, your claim that mark-up prices “do not respond the way postulated by any pricing theory…of supply and demand” shows that you are purposefully evading what has already been explained to you many times. Direct supply and demand DON’T NEED to fully explain such mark-up prices, in order for free market prices to tend towards clearing, and, interestingly enough, in order for supply and demand to indirectly affect prices that are set in accordance with costs.
Prices, all prices, are indeed flexible, and they indeed “generally speaking” tend to market clearing levels. You have on more than one occasion conceded that this is true, by accepting the effect that demand changes have on costs of production via changed investment, and hence on mark-up prices which are prices set by the costs of production determined by past investment.
“You once again concede the argument that prices change in response to demand.”
Nobody ever claimed that all prices never change in response to demand, nor that **exceptionally** some mark-up prices may change in response to demand conditions.
“Prices, all prices, are indeed flexible, and they indeed “generally speaking” tend to market clearing levels”
False.
If that were true, you would not find results like this again and again in surveys of businesses.
E..g., Hall, Walsh, and Yates (2000) report the results of a survey of 654 UK companies in 1995.
Firms were also asked: what happens when there is strong demand and this cannot be met from inventories or stocks?
The result was as follows:
Increase overtime | 62%
Hire more workers | 12%
Increase price | 12%
More capacity | 8% (Hall, Walsh, and Yates 2000: 442).
——–
You live in fantasy world, MF, where you simply assert things without evidence.
But then delusional people like you no doubt think empirical evidence “never proves anything”.
Sure you did. You said so on many occasions on this blog that “fixed price” businesses respond to demand changes by changing production, or laying off or hiring workers, not by reducing prices as the Austrians allegedly predict.
That is equivalent to saying prices do not change in response to demand changes!
You’re just having a changed view, and you won’t say thank you to the people who changed your mind. You’re only just dealing with your changed view by pretending you have always held that view, because you’re so deathly afraid of admitting just one occasion of changing your view, lest the rest of your views be similarly questioned. It’s obvious LK.
Hahahaha, so now we’re back at prices never changing.
Hilarious.
It must be hard defending contradictory premises.
Once again, surveys are not pricing actions. You were already demolished on this point, and even Ken B couldn’t help himself in saying you were wrong on that point too.
You don’t seem to really appreciate the massive contradiction in your statements here.
On the one hand, you say that prices do change in response to demand. You do this by saying that you “never said prices never change” in response to demand changes.
On the other hand, you’re trying to also claim that prices never change in response to demand changes by citing surveys that show businessmen saying that they respond to demand changes not by changing prices, but by changing the extent of production and number of employees.
Those two positions cannot both be true. Either prices don’t never change in response to demand changes, in which case the survey is not an accurate representation of actual pricing reality and you are actually contradicting yourself in your approval of the surveys as accurate representations of pricing reality, or else prices do never change in response to demand changes, in which case you would be contradicting yourself the other way.
Either way, you are contradicting yourself.
You conflate nominal demand with quantity demanded. That survey is not what they would do in response to an increase in nominal demand, but what they would do if there is a change in the quantity demanded.
Try again LK.
“You said so on many occasions on this blog that “fixed price” businesses respond to demand changes by changing production, or laying off or hiring workers, not by reducing prices as the Austrians allegedly predict.
That is equivalent to saying prices do not change in response to demand changes!”
No, only that it happens **generally or as general rule.**
That isn’t the same thing as claiming that prices never in human history change in response to demand,
You never said “generally” before. You only recently started to use it, AFTER you learned, from your truly, that even administered prices do in fact change in response to demand.
The “generally” just means you now grant that the price changes take place over a somewhat longer time horizon than you were originally considering.
Administered prices do in fact change in response to changed demand. They so do indirectly through the effect on investment and costs, which takes somewhat more time, than direct supply and demand pricing.
You agree with this. Did your quoted survey on what businesses do, ask the question of what buyers and sellers would do if they owned more as opposed to less of what is for sale? That if businesses laid off workers, and if they put capital into idleness, that with these additional labor supply and capital supply in the market, that they would likely respond with asking and bidding LOWER prices?
Of course it didn’t. The survey asked necessarily ceteris paribus questions constrained to immediate moment and short term horizon events. It doesn’t matter if a firm responds to what they would do with a lowered demand by saying they would lay off workers. For it doesn’t consider what they would bid for labor if there were more laborers versus fewer laborers for jobs. It also doesn’t ask laborers what they would ask if there were more laborers competing for those jobs, as opposed to themselves as the only potential laborer.
These considerations also affect prices, but the survey doesn’t ask them.
General rule? All that means is that prices change in response to demand, just not as fast as you personally prefer.
“You never said “generally” before. You only recently started to use it, AFTER you learned, from your truly, that even administered prices do in fact change in response to demand. “
Sheer and utter breathtaking lies:
23 May 2013:
“Prices in fixprice markets generally remain unchanged when demand changes. Therefore they are not the “necessary transmitters of knowledge” in these cases at all. “
http://consultingbyrpm.com/blog/2013/05/krugman-government-policy-has-always-been-at-war-with-the-deficit-scolds.html#comment-64831
19 November, 2013:
“But just because markup prices might change when costs change that does not mean that prices generally change in response to demand, or that they are flexible in mutual trades where agents try to find market clear prices.”
http://consultingbyrpm.com/blog/2013/11/fellow-rothbardians-the-jig-is-up.html#comment-81270
I have been saying this for nearly a year.
Oh, it looks like the bold tags in the last comment went wrong.
Hopefully Robert Murphy has some way of fixing it.
I’ll repost this:
“You never said “generally” before. You only recently started to use it, AFTER you learned, from your truly, that even administered prices do in fact change in response to demand. “
Sheer and utter breathtaking lies:
“Prices in fixprice markets generally remain unchanged when demand changes. Therefore they are not the “necessary transmitters of knowledge” in these cases at all. “
http://consultingbyrpm.com/blog/2013/05/krugman-government-policy-has-always-been-at-war-with-the-deficit-scolds.html#comment-64831
23 May 2013
So I never said “generally” before?? lol:
26 June, 2013:
“Administered prices are generally inflexible with respect to demand changes, and when changed are usually changed because factor input prices change.”
http://consultingbyrpm.com/blog/2013/06/the-cross-keynesian.html#comment-68030
Keep going.
You already have evidence right before your eyes that I was already saying it in May 2013, and kept saying it.
E.g.,
19 November, 2013:
“When demand changes, businesses generally just adjust production and inventories.”
“Once we factor in wage rigidities, it is clear that modern market economies do not have general or strong tendencies to market clearing,”
http://consultingbyrpm.com/blog/2013/11/fellow-rothbardians-the-jig-is-up.html#comment-82049
You’re changing your ideas over a longer period of time than that!
“Prices set by businesses are not equilibrium prices. As Lee says, “administered prices are not market-clearing prices and nor do they vary with each change in sales (or shift in the virtually non-existent market or enterprises ‘demand curve’)” (Lee 1994: 320, n. 18).
The neoclassical and Austrian view (or at least a view held by some Austrians) of universal supply and demand dynamics governing all prices which gravitate to their equilibrium values thus becomes untenable.” – 2012.
The point though, which is far more important, is that prices set by costs of production do in fact change in response to changes in demand. They do so indirectly, by way of demand changes effect on investment and hence costs of production and hence prices set by costs plus mark-up.
You have been making the blanket statement for many years that fix price markets do not respond to demand changes with price changes. That’s false. They do. They respond to it indirectly, over a longer period of time than short term, direct supply and demand pricing.
“You have been making the blanket statement for many years that fix price markets do not respond to demand changes with price changes.”
You continue to spout the utter lie that I have said that mark-up prices never change or are eternally fixed.
In fact, I always said:
“Prices in fixprice markets ****generally**** remain unchanged when demand changes. “
http://consultingbyrpm.com/blog/2013/05/krugman-government-policy-has-always-been-at-war-with-the-deficit-scolds.html#comment-64831
23 May 2013
In short, your lies just reveal your utter defeat and humiliation on this topic.
As I said, you’ve changed your tune over a longer period than that. I posted a quote from you from 2012. You come back with 2013.
“On the other hand, you’re trying to also claim that prices never change in response to demand changes by citing surveys..”
False. You are a liar.
The survey shows that only 12% would increase price in response to a boom in demand that cannot be met form stocks.
This confirms that ** generally speaking ** or in **a majority of cases* many prices are not response to demand.
It is only you — a laughable lying fraud — who is now forced to literally lie about what is right in front of eyes.
This is just the new LK talking.
Before you never used the word generally. That’s new.
Before you said that firms respond to lowered demand by laying off employees and/or changing their output.
Now you’re saying “generally”, which is a baby step towards you abandoning your original absolutist position.
Austrians have never denied that firms might respond to changed demand by changing their employee number or output quantity. They have never denied that prices is the ONLY way that any adaptation occurs at any given moment.
They have argued what you now concede, which is that even administered prices adjust, by way of the changed demand’s effect on investment and costs of production and hence cost plus mark up pricing.
You have already conceded the debate. Now you’re just hand wringing and trying to make it seem like you never said what you said before. That we’re all “liars” for exposing inconsistencies in your claims.
If a firm attempts to keep the price of it’s products exactly steady and goes out hiring more workers, buying more materials, using up machinery parts faster, etc… the result will be that the price of labour is effected, the price of raw materials is effected and the price of machinery parts is effected.
Thus, even in the case of a “fixprice” component in the supply chain, you still have market adaptation (somewhere or other). Eventually those market adaptations will stack up and the firm will end up changing the price of their product… even when they do use a fixed markup formula.
By the way, google recently released their 16G Nexus-5 smartphone in Australia at $399 for an initial product run that sold out in two days near the end of 2013.
The same phone is now advertised for $429 at online stores and ranges up to $500 in retail stores. They obviously need someone to explain to them how economic theory works. Yes, that was sarcasm.
Tabarrok is making a pragmatic argument disguised by moralizing. So I have a hard time giving him the double-u.
“==> A good interview with me on hard-core voluntary society stuff. I am not sure exactly where I come in; I’m definitely in the middle third if you want to move the pointer around.”
Good talk. I like the 37 minute mark. Michael Dean”Don’t end the fed, instead end the state.” Bob Murphy” End the State but make sure you first change the hearts and minds of man.”
I agree. Humanity needs to evolve. Whether it be spiritual or genetic, humanity needs to grow up and learn to self govern, let go of the nanny state mentality. Time to wear big kid britches…
Lew Rockwell wrote some doozies about 20th Century composers. I’d rather listen to Schoenberg than Lennon, any day.
I didn’t know that about you Ryan. I was classical music director and host for two radio stations, long ago.
I’d say it depends on which Schoenberg! You can have Pierrot or Erwartung.
Of course if wanted to set the Roddis LK duet to music that is what you’d end up with …
Amazon has an 11cd box with Boulez conducting for about $22
Now, now, Ken that’s just not right. Amazon can’t go around offering discounts on music when the surveys said fixed costs with fixed markup.
How you go about calculating cost plus markup for the music industry is anyone’s guess, but you know how it goes: believe at least three impossible things before breakfast.
Boulez was working cheap that week; lower cost. But only for Amazon; it’s pricier at Tower.
What? The same product for different prices in two different stores… outrageous!
It’s a market failure, head for the hills. Women and children into the lifeboats. Oh God, oh Government, save us from this.
*SOB*
Ken B, thanks for the pointer. I just bought it. 🙂
For those interested, Bob’s interview lasts from about the 13:10 mark to the 1:21:00 mark.
Tearing down statues of Lenin. http://m.youtube.com/watch?v=DLZ7pWtyLCY&feature=youtu.be
This stuff just never gets old.
But let us not forget. Buckley was right. In the true fight for liberty, the fight which has led to the greatest increase in liberty ever, “Libertarians” have been by-standers.
Libertarianism is a philosophy that the individual must accept within themselves Ken B. A libertarian revolution cannot work with a revolutionary vanguard of libertarians as against non- or anti-libertarians. Such a non-individualist movement would invariably result in this rather fitting sequitur to your post:
http://i.imgur.com/56Bh85Y.gif
The reason “this stuff never gets old” is because most people have the same flawed mentality about libertarianism in general, and libertarian revolutions in particular, as you do. The true libertarian fight is an intellectual one, that convinces people to internalize it as individuals, through their own choice. It can’t work by being forced on people. People cannot be forced free.
The greatest movements towards liberty have never taken the form of physical battles. They have taken the form of intellectual change in the mass population. I know you don’t really study history, so you aren’t aware that the American Revolution was actually a period of DECREASED liberty, not increased liberty. Before the US federal government was formed, the average individual in what is now US territory actually had more economic and social liberties. The American Revolution, the writing and enforcement of the Constitution, these were events that consisted of centralization of power, and decreased liberty. These were the seeds of the Civil War.
Libertarians have not been bystanders. It is libertarian theory that is responsible for why we have as much freedom as we do. Those who choose to fight for liberty, do so either to enact a new anti-libertarian statist structure, which was the case in Libya, Egypt, Venezuela, and the Ukraine, or in the name of a private law society. Consistent libertarians really have no consistent way of involving themselves in such statist revolutions.
You could sum up this MF’s commentary in this cartoon:
http://praxeology.net/true-power.jpg
You know that saying “Great leaders are made, they are not born”?
Many people interpret that saying as a description of the individual leaders themselves. How they make themselves leaders as opposed to being biologically or ontologically predisposed.
I interpret it however as exactly like this cartoon.
Yes you first have to change the hearts and minds of mankind. Liberty is a way of thinking, a decision.
I wonder how many people out of 7B, have to make this internal choice, for society to fundamentally change.
Good question.
I think there is no hard and fast number. I can conceive of real social change taking place on the basis of pure numbers, but I can also conceive of it happening on the basis of certain intellectual and social elite, who are on average more influential in the population than others in terms of persuasion. If I went on CNN or MSNBC and advocated for libertarianism, the influence would almost certainly be far less than if, say, a world famous individual did it.
I will grant the possibility that just one individual is capable of doing it, but they would have to be extremely well regarded around the world, but then again, the world would also have to be ready for that individual to influence them. Organic, grass roots change is I think the lasting change.
During my visions of grandeur, I imagine what I would say as President.
1. Don’t hurt anybody.
2. Create and produce things that make your life better.
3. Live and let live.
Until a President comes out and says this, minus all the other garbage, I know we are not the land of the free.
I still am curious how many people will have to change their own minds before society changes. There has to be the turning point.
Maybe it will just be like a light switch.
Like Bob Murphy says, you can only educate people. That’s all you can do…
If Obama says all of those things next week I would not be surprised, nor would I believe him.
Not sure how to take this ” Love Letter To Big Government” by Bob Garfield?
http://www.denverpost.com/opinion/ci_25199191/love-letter-big-government?source=nav
Since I don’t have a blog.
Anybody seen the new Wal-Mart commercial? Wal-Mart is saying they will invest 250B the next 10 years in American producers.
The commercial has an factory setting with lots of hard working folk. All the while a song from the Canadian rock band Rush is playing. The song, Working Man, is not a great song about being a workingman, If you know the lyrics, the song is sort of a surrender to the grind and the best one can hope is a few beers at the end of the day.
Just thought I would point this out. I shop at Wal-Mart every week, enjoy free trade, have no problems with Canada and I have always like Rush, but this commercial seems like a confused mess.
Could they of not selected more appropriate music?
I had thought about blogging about this, although my contention with the commercial was that it claims “We’re getting back to what we do best” implying that we do manufacturing best, which is a pretty specious claim…
It also ignores the basic economic concepts of comparative advantage and specialization. The masses seem to take for granted that “America was better when we built stuff” but that generally relies on accepting some sort of mercantilism economic program.
Personally, I think we’re doing pretty okay not building things. Lord knows I wouldn’t want to trade places with Bangladesh…
Well obviously they cant even make a good commercial so we are already in trouble, yikes…