Who Needs Advertising?
I am sure there are nuanced arguments for government intervention in the health care sector. Not that I would endorse them, but I’m sure they exist. However, Krugman approvingly quotes the following today on his blog, and I don’t think it qualifies:
A medical technology company is going public to generate the money it needs to advertise its products to hospital directors and insurance-company reimbursement officers. This entails significant extra expenditures for marketing, the new stocks issued to fund the marketing will ultimately have to pay dividends, banks will have to be paid to supervise the IPO that was needed to generate the funds to finance the marketing campaign (presumably charging the industry-cartel standard 7%)…and all this will have to be paid for by driving up the price the company charges to deliver its technologies. But beyond the added expense, why would anyone think that a system in which marketing plays such a large role is likely to be more effective, to lead to better treatment, than the kind of process of expert review that governs grant awards at NIH or publishing decisions at peer-reviewed journals? Why do we think that a system in which ads for Claritin are all over the subways will generate better overall health results than one where a national review board determines whether Claritin delivers treatment outcomes for some populations sufficiently superior to justify its added expense over similar generics?
So why stop there, Krugman? (To repeat, those aren’t Krugman’s words above, but he approvingly quotes them.) Why not have a single payer for sneakers and alcohol? Can you imagine how much more efficient these industries would be?
Also, for people like Daniel Kuehn who can’t understand why I exclude Krugman from the ranks of “free market economists”–look at the bold above. If “free market economist” includes people who believe that, then the term is meaningless.
I’m curious what you think of peer review among academics with a sentiment like that, Bob. The same sorts of information asymmetries apply, but we’ve determined that it’s better to discuss papers critically with our peers. When you review for RAE, why don’t you simply submit a price list to authors ($X for an uncritical acceptance, $Y for an acceptance with lots of things to correct, and for those who won’t pay a rejection).
You don’t do that because you know it’s not an efficient way to produce the highest quality scholarship, so other institutions like peer review have evolved (and are continuing to evolve – now we have the rise of readily available online WPs, and the decline of double blind review at the AER). How is your reaction that it’s probably better for you to do a scholarly review than accept money from authors any different from Krugman’s suggestion that it might be better to review certain drugs in a scholarly, rather than commercial, context?
How is that any different? I don’t see it.
Now I don’t know the drug market – clearly there’s a difference between Tylenol and a cancer cocktail. But don’t think that an openness to institutions other than markets for decision making is an opposition to free markets. That’s like calling a kid that runs around banging in screws with a hammer a “pro-hammer kid”. He’s not “pro-hammer”. He misunderstands when it makes sense to use a hammer, and in that sense he’s not really respecting the proper use of a hammer.
DK, holy cow man, you have to look at the context. We’re not deciding from scratch how we want a thing to be organized. Someone is saying “Advertising looks dumb. Let’s take a bunch of people’s money, make it illegal for them to do certain things, and then have experts tell us what to do, and that will be more efficient.”
Well lets stick to the original topic.
The point is valid whether we’re talking about single payer, a public option, or the market.
Let’s bring this back around to RAE again – the government isn’t making you do peer review that way. But you do. Why? Because you understand that market exchange would be a terrible way to produce scholarship because of the information asymmetries involved.
The point is valid.
Whether that means that we oughta bring government into it is a different question entirely, but the point stands no matter what your position on government.
You need to get past this idea that it’s always government vs. market. There are non-market institutions that are better than markets at doing certain things and pointing that out doesn’t make someone against markets. Guys like myself won’t automatically disqualify government from that list, and guys like Krugman are going to be even more receptive to government than me. That’s a different question entirely. On the question of market allocation in the face of information asymmetries, Krugman is right.
“the government isn’t making you do peer review that way. But you do. Why? Because you understand that market exchange would be a terrible way to produce scholarship ”
Just look at this double standard. The automatic presumption here is that everyday people who are unhindered (i.e. free) from government beurocracies are incapable of recognizing that you don’t always get what you pay for but the so called government “experts” are ALWAYS capable and privy to this “special knowledge”.
What a bunch of paternalistic baloney. Sounds like a new form of priesthood to me DK and based on your previous posts it doesn’t sound as if you (and not to single you out)or Krugman or anyone else with this view would ever stand for being one of the flock over one of the endowed so what makes you think that anyone else would either?
And, more importantly, what gives them the right to IMPOSE those roles against their will as government regulations necessarily do?
If you can point me to any time where I ever suggested that that government experts are always capable of processing and privy to special knowledge, then I’ll consider giving you the time of day.
I’m sick of being expected to defend claims I’ve never made, explicitly or implicitly.
If you want to bitch about this – find someone that actually holds these positions.
ok.
Here:
“The point is valid whether we’re talking about single payer, a public option, or the market.”
and here:
“You need to get past this idea that it’s always government vs. market”
and here:
“There are non-market institutions that are better than markets at doing certain things and pointing that out doesn’t make someone against market”
and here:
Guys like myself won’t automatically disqualify government from that list
the SHOE fits despite the fact that you pretend not to WEAR it.
“endowed shepherd” was what I meant to say, I was typing too fast…
Voluntarism vs. coercion
There is always information asymmetries, everywhere, for all trades and all interactions. This follows from the fact that everyone has different thoughts, meaning different values, likes/dislikes, knowledge, specializations, and goals.
If information asymmetry was a valid premise to dictate what people do, then the institution of the state should be drastically reduced, if not abolished, because the information asymmetry between the state and the people is MUCH greater than the information asymmetry between two academics debating over the internet where virtually every academic paper is, in principle, accessible.
How many documents do you think are accessible to you and I from the CIA, or NSA, or the FBI?
This information asymmetry argument is ultimately a reflection of one’s metaphysical views of reality. Those whose metaphysical views are that separation, isolation, distinction between objects is intolerable, and must be transcended, so that such separation and distinction eventually collapse, such that reality becomes one, singular, and all knowledge becomes known by everyone, who are also together and connected in some cosmic blob, tend to find capitalism and the free market as inherently flawed and intolerable, what with its institution of the division of labor, and hence division of knowledge, and hence information asymmetry.
Only the concept of “oneness” can overcome this intolerable separation, and wouldn’t you know it? The state is a monopoly. It is singular. It is the path to social oneness, and the solution to overcoming information asymmetry.
Egad people can be so confused.
Are you really so blind that you can’t even see that the internet, which is perhaps the economy’s LEAST regulated market, is the world’s greatest realm for scholarship, education, and knowledge transfer? Am I just imagining this?
It is not a different question entirely. It is logically implied in your attack on the market process to handle scholarship. If you attack the free market process to handle scholarship, then the ONLY solution is for the free market process to be violently stopped, such that scholarship can be had through some other mechanism. What other mechanism is there besides voluntarism and violence? Market or government?
Please do tell how you can say the free market is terrible at providing good or service X, and why that would not imply that violence, i.e. the government, is the logically implied solution.
You need to understand that by “getting past” the government vs. the market, you are entering into a non-existent realm of magical faeries.
LIKE WHAT?
If it’s voluntary, it is by definition a part of “the market.” The market encompasses ALL voluntary transactions of goods, ideas, money, whatever. That IS what the free market is about.
Because guys like yourself believe that violence against innocent people can be used for “good,” as long as that violence is directed towards your own personal preferences.
There is nothing the government can do that does not violate someone’s person or property somewhere. They are society’s monopoly institution of violence.
If he’s right, then like Murphy said, his logic inevitably leads to the conclusion that NOTHING should be carried out by the market process, because knowledge in a division of labor society is by nature diffuse and spread among economic actors. Information asymmetry is built into a free market, division of labor society.
The only way you can stop information asymmetry is by stopping the division of labor, which means taking us back to the dark ages.
The information asymmetry is grounds for doubting market efficiency in making a specific allocation decision.
It is not only grounds for government intervention. Didn’t you read where I said that this argument Krugman makes about review boards vs. markets applies EQUALLY WELL to (1.) public options, (2.) single payer, or (3.) completely private provision?
You all are stuck in this rut of thinking it’s either government or the market. The market is a very specific sort of private institution. Krugman makes an excellent argument for the problems that the market has in certain parts of health care. That is true independent of what you think of the role of government. After all, the government doesn’t (1.) review Bob’s RAE articles, (2.) administer confession to Bob in church, or (3.) comfort Bob’s kid when he’s sad. These are all things that we know for one reason or another the market does VERY POORLY. It’s not “non-free-market” to point that out, and it’s not necessarily a call for government.
“The information asymmetry is grounds for doubting market efficiency in making a specific allocation decision.”
No, its not. Knowledge is not something that is available to everyone everywhere in any context.
Asserting that the asymetry of information is grounds for a market failure is just the same a saying that reality is grounds for market failure since it is reality that we live in and gain knowledge from, asymetrically.
You didn’t respond to any of the substantive arguments I made.
Think about this. Efficient? Efficient according to what standard?
To doubt market “efficiency” is to NOT doubt government “efficiency.”
What else it is “grounds” for?
Daniel, I say this with utmost respect: YOU are the one who is stuck in a rut. There is NO other alternative for humans to deal with each one another, other than through peaceful cooperation or through violence. There is no other way humans can act. This is not a “rut”, it is a fact of human life. If you call facts “ruts” then lord help you.
He made a fallacious argument that presumes peace and free trade is inherently problematic, such that it’s up to the free market to constantly prove itself to Krugman (and you), and if it doesn’t live up to his (your) subjective whims of what constitutes “efficiency”, then the “real” standard of state control must take over.
You claim that you’re not calling for the state, but there is no other possibility, which means you’re just confused. It’s either voluntarism or violence. Take your pick.
No, it’s NOT “true”. It is FALSE. That you subjectively believe that other people, who use different criteria than you in deciding which knee brace to buy, such as advertising instead of quality of product, is nothing but you trying to elevate your own subjective opinions as if they are objective. Quality and utility are SUBJECTIVELY determined. If I find more happiness from buying a product from a successful advertiser at a higher price, rather than buying that same product from someone else with no advertising at a lower price, then you cannot claim that something is “wrong” here that implies the free market has inherent “flaws.” Human action is inherently “messy” if your standard is omniscience.
It is, using a rational standard that exists, instead of an irrational standard that does not exist, efficient for the individual to be free to make these decisions on his own, so that he can learn what he values and what he does not value, by considering his own life, and the lives of others who also make decisions.
For every story of someone believing that knee brace from XYZ is superior, even though it’s the same knee brace from ABC, I can show you someone who believes what Paul Krugman says simply because he is advertised as a Nobel Prize winner, rather than Robert Murphy, who is not advertised as such. Does this mean that there is something wrong with the academic process that requires the state to take control over all academia? Or do we make the illogical halfway claim and say that academia has flaws, never reveal what standard we are using to make this conclusion, subconsciously knowing that the real standard one invokes is the state, and denying any accusations that one thinks the state can solve those alleged flaws?
VERY POORLY FROM WHAT STANDARD???
You keep evading the necessity of supporting your contentions.
So it’s nothing except what you subjectively believe that has nothing to do with what anyone else actually values.
After all, the government doesn’t (1.) review Bob’s RAE articles, (2.) administer confession to Bob in church, or (3.) comfort Bob’s kid when he’s sad. These are all things that we know for one reason or another the market does VERY POORLY.
WHat the heck are you talking about?
Thanks for bringing that up, M_F, I too was curious as to what this 3rd option Mr. Kuehn was referring to. I am curious as to what it is, because all I can think of is voluntary action (market) and coercion (the State). Can’t wait to see what he comes up with…
Well yes, voluntary action but not necessarily market action.
Once again – this is precisely why I keep referencing the RAE. That is voluntary, non-market action. Because the editors and referees at RAE know damn well that the market would produce crappy scholarship.
Bob still hasn’t told me how his use of peer review rather than the market to review peoples’ papers is any different from what Krugman is talking about here.
“voluntary action but not necessarily market action.”
voluntary action is a “market” action. non-voluntary action is compulsion and is not a market.
the voluntary exchange of information and the voluntary exchange of goods are both functions of a free market.
free exchange is the defining characteristic.
unfree exchange is theft.
RS – this is not how economists define “market”. Check out the 2009 Nobel Laureates, for starters! If by “market” you just mean “anything voluntary” then obviously that’s a different story, but that’s not the meaning of “market” and it’s not how I’ve been using “market”.
Good grief Kuehn, do you make it a habit in trying to reinvent the wheel?
The free market is ALL voluntary exchanges, of goods, services, ideas, EVERYTHING.
You are not holding a correct understanding of the market.
Check out 2009 Nobel Prize winners? As if the nature of the market has suddenly changed?
No MF – the nature of the market hasn’t suddenly changed, which is why it amazes me that you all are talking like this. The 2009 laureates did work in non-market voluntary arrangements.
A review board for drugs is a non-market decision mechanism.
So is an editorial board at a scholarly journal.
Good lord you’re obtuse. Yes, I know that the market hasn’t changed. YOU are trying to change the meaning of the market.
If they were voluntary, they were market arrangements.
No, a voluntary review board for drugs is a market decision mechanism, if the review board is engaged in exercising their property rights, and exchanging their conclusions with others voluntarily.
An editorial board at a scholarly journal, provided the journal is financed voluntarily, who receive papers from academics voluntarily, for the purposes of publishing in their journal, who will then release these published journals to others at terms the editors and the readers agree to, is also a free market interaction.
Your conception of the free market is totally wrong.
re: “What other mechanism is there besides voluntarism and violence? Market or government?”
Huh?!?!!?!
What are you talking about? What do you think the market is – “things that aren’t government”??? I’m not sure where to begin on this one.
I’ll say it again, voluntarism vs. coercion. Pretty simple.
Joseph –
Right – but voluntarism and the market are not coterminous!!!!!!!!!
I don’t know if you’re being deliberately obtuse or if you’re really not processing what I’m saying.
Market allocation does a bad job at a lot of things that other allocation methods would do better at.
– Choosing a wife.
– Choosing a one-night-stand.
– Getting a kind word.
– Producing scholarly work.
– Perscribing health care.
– Receiving holy sacraments.
– Deciding with friends what to do on a Friday night.
– Picking a candidate to vote for.
There’s lots of stuff that the market is very, very bad at doing and it’s not being against free markets to note that!
The market is merely the extension of voluntary action to that of voluntary exchange. While one can use a Crusoe model in explaining voluntary action, it does not contain exchange per se, but instead is comprised of tradeoffs. When it comes to society, there are exchanges made, not all of them being in a physical realm, this is what I think most everybody is referring to when they say “market”.
When I choose a mate, there is an tradeoff or exchange happening, just as when I give a kind word to somebody, or choose a candidate. While this may manifest itself in a psychic profit, or in some tangible action on the part of the receiver of my actions, it is still based upon the same principles.
The market is merely a term used to describe voluntary exchanges, not all of them must be tangible. However, that is why I stuck with the much simpler “voluntarism vs. coercion”, because even though not all voluntary activity is market activity, all market activity is voluntary. And, even though not all coercion is government activity, all government activity is coercion.
Yes they are!!!!!!!!!!
I am not sure if you’re deliberately trolling people here, or if you are seriously confused.
Choosing a wife voluntarily is engaging in the free market for spouses.
Choosing a one night stand voluntarily is engaging in the free market for casual sex pursuers.
Getting a kind word, or in general free speech, voluntarily is engaging in the free market of friends/colleagues/etc.
Producing scholarly work voluntarily is engaging in the free market of trading property (paper, ink, or email, etc) and the free market of ideas by people making available their property to others.
Prescribing healthcare voluntarily is engaging in the free market of healthcare.
Everything else you said is also a part of the free market.
Market deals with exchanges. This can be everything from exchanging words to exchanging multinational businesses, and everything in between.
BAD ACCORDING TO WHAT STANDARD????
AH, I see what’s going on.
DK is making a false distinction between exchange of material values vs the exchange of spiritual values (spiritual as in cognitive not in the mystical sense), the former is a “market” and the latter is something else that is not a market (the health care item listed is an exception as health care is a material value).
How is it that choosing ones friends or lovers is somehow different than choosing ones car or house?
Why is the first category protected from people like Krugman but the second not?
Why is it permissible to allocate material values but not permissible to allocate spiritual values?
Why is the mind to be left free to choose its desires but not the body?
RS, I think you are right.
DK does seem to be making a false distinction between exchange of material values vs the exchange of spiritual values (spiritual as in cognitive not in the mystical sense).
You’re right, there is no difference, in principle, between choosing one’s friends or lovers, and choosing ones car or house. In both cases, the aim is to achieve desired ends, using some means, in a voluntary way.
You getting skinny, so I moved the topic down to the bottom to fatten you up a bit.
😉
The original Economist blog post Krugman was quoting deals with this objection (sort of). Here’s the relevant bit, considering the difference between markets for medicine and shoes:
Beyond a certain point, you can’t explain the value of a great pair of shoes in any rational fashion. The reason a pair of Air Jordans was vastly superior to a pair of nondescript Soviet sneakers in 1989 was only partly that they were more durable, or had better support and traction. Most of the added value wasn’t there. It was in the interplay of marketing and fashion. The satisfaction customers derive from marketing and fashion is absolutely real; in the case of shoes, it’s practically the whole point. But in the case of medicine, it usually shouldn’t have any place in decisionmaking. We shouldn’t be aiming to make Americans happy by marketing medically useless knee surgery to them and then letting them walk down the street feeling all fine and dandy with snazzy new knees that aren’t actually any better than the old ones. Not in the publically insured sector, anyway. Medically unnecessary cosmetic surgery is fine, but not on the taxpayer’s dime.
Krugman wrote:
“Not in the publically insured sector, anyway”
Well I have some good news about libertarian thought for him!
I was thinking something similar, Bob — his argument was way too general and proves far too much.
This is in the same category as saying that it’s better to have services provided by the government because they don’t need to earn a profit or thinking that middlemen simply raise costs. The fallacy (among others perhaps) of course is thinking that the low levels of certain costs are independent of the presence or higher levels of certain other costs. Nonsense of course.
Uh oh, lots of punctuation marks cropping up. This is getting heated.
Let me make two points to try to defuse things:
(1) In Daniel’s defense, he is using “market” to mean something much narrower than “voluntary exercise of property rights.” So for Daniel, a pickup game of dodgeball isn’t organized according to market principles, whereas Major League Baseball is closer to being organized along market principles, and of course Wall Street really is.
(2) Against Daniel, I am pointing out that what Krugman et al. are proposing is to violate existing market relationships. So that’s why they are “anti-market.” If two guys are haggling over how much one will pay the other to sweep his garage, and then a third guy comes along and says, “If you pay him less than $7.25 per hour, I will shoot you,” that isn’t just a “non-market way of allocating resources.” That is actively interfering with how the market works. You can’t say, “That’s the same thing as dating without reference to money.”
If Krugman wants to give people health checkups in his house in exchange for limericks, more power to him. Then I’ll be happy to say he’s “pro-market” or “free market.” But that’s not what he’s proposing at all. He’s going to overturn the (already regulated) health care sector because he thinks a bunch of experts know better than the idiots relying on price signals.
(1) In Daniel’s defense, he is using “market” to mean something much narrower than “voluntary exercise of property rights.” So for Daniel, a pickup game of dodgeball isn’t organized according to market principles, whereas Major League Baseball is closer to being organized along market principles, and of course Wall Street really is.
I can’t even wrap my head around this. Maybe I am totally clueless about something so incredibly simple, but how in the world can anyone really think, or rather, what is the basis from people derive such a belief, that a pick up game of dodgeball is not included in the free market, whereas a game of Major League baseball is?
I’m as confused as a virgin on prom night.
“(1) In Daniel’s defense, he is using “market” to mean something much narrower than “voluntary exercise of property rights.”
Yes, that became apparent when he listed what he thinks a market with price signals would not be good at allocating (e.g. friends, lovers etc.).
But, this is a superficial distinction. Why divide the two? Just because one is studied by Nobel economists and one is not? Nonsense. Both types of exchanges involve costs and benefits. After all, one can only have so many friends, lovers etc.
Fundamentally, the element of time is the coin being spent in exchange for pursuing both material values AND spiritual values. In either case there is an “exchange” of values whether one chooses to spend time with one’s wife person of one’s friend or choosing to spend time to earn money to buy one car instead of another.
The only real difference between the two is the fact that one set of values can be expressed in cardinal terms (i.e. prices) and one in ordinal terms (friend vs lover), quantitative and qualitative, but “exchange” is an essential element in any case.
Once this is admitted there can be no reason to apply a different standard for “allocating” values for one set of exchanges but not another, hence if one should be left free to choose ones friends or lovers then one should be left free to choose ones houses or cars.
The thing with number 2 is isn’t it obvious?
I mean isn’t it obvious that if you don’t like the way things are, and things are that way because there is no legislature saying it ought to be different, that the only way to change this is by introducing legislature.
I would be honestly surprised if Daniel came out and said “yeah of course all the stuff Krugman talks about would just be achieved if the government rolled back all its regulations, but I still won’t call it a market”
I mean does he actually believe that the sort of things Krugman is saying can be achieved without legislature enforcing it?
Erm, guys, I’m pretty sure you’re on the wrong side of Mises, Hayek and many other economists. Market activity is voluntary exchange conducted in money. It is not merely two rational individuals coordinating their action to produce some desired result. If there is no monetary calculation involved, there is no market. Daniel Sanchez over at mises.org explained it as follows: “A market is a social system of production in which profit, loss, interest and wages, denominated in money terms guide production so as to better serve consumers. Anything not produced by that particular dynamic is not a product of the market.”
A man taking a woman on a date acts rationally, economizes his resources, seeks the greatest gain at the lowest cost. His getting lucky at the end of the night, however, is not a market outcome.His buying the services of a prostitute, however, would be market activity.
To broadly define market activity as any voluntary interaction is to make the word practically useless. Certainly you would agree that there is a meaningful distinction between all voluntary interaction/’exchange’ and the buying and selling of goods and services using money, and I think Kuehn has the Austrian giants on his side when he calls the latter and not the former the ‘market’. And as Bob says, what matters is that he’s made this distinction and is talking about the latter and not the former. Address that, and not his word choice.
So, a barter economy doesn’t have a market?
Here is Mises definition:
“The market economy is the social system of the division of labor under private ownership of the means of production. Everybody acts on his own behalf; but everybody’s actions aim at the satisfaction of the other people’s needs as well as at the satisfaction of his own. Everybody in acting serves his fellow citizens. Everybody, on the other hand, is served by his fellow citizens. Everybody is both a means and an end in himself; an ultimate end for himself and a means to other people in their endeavors to attain their own ends.” Human Action p.258
I think that you might want to reassess your statement that we are on the wrong side of Mises or Hayek.
If I trade the service of me playing my guitar for my friends children for an hour in exchange for him trimming my hedges, is this not a market activity? The market appears before money, and money is not necessary for a market to exist, money is merely a homogenous good that is the general medium of exchange, thus allowing for greater efficiency in exchange and economic calculation.
I just want to say that I agree Mises later statement that the basis of a market economy is money and its prices, but that I think that my earlier statement of that voluntarism is far more important in determining if an actual activity is a market activity or not stands. If there is coercion, then any sense of market activity, or the market, is entirely lost. While Mr. Kuehn called me obtuse for simply stating “voluntarism vs coercion”, it is my belief that this is the prime consideration in the case of Krugman’s argument, because he is most certainly calling for coercion, which is morally reprehensible.
If there is coercion, then any sense of market activity, or the market, is entirely lost.
Given that coercion in defense of property rights is necessary to preserve markets, I don’t think this is right.
I know, I know, coercion in defense of property rights is not really coercion. Just as Rothbardians have an idiosyncratic definition of “market” they also have idiosyncratic definitions of “force,” “violence,” “coercion,” etc.
Sorry, I should have been more specific and said “free market”.
😉
Joseph,
I don’t see how adding the word “free” before “market” changes anything. You still need coercion or the threat thereof to protect private property.
A free market is one that is free of coercion and aggression, so it is relevant to the statement of mine that you quoted. As for coercion, aggression, or violence for defense, it is obvious that there is a moral and philosophical distinction between violence in defense and aggressive violence toward persons or property. I let Rothbard’s words do the talking….
“There is all the world of distinction in kind between aggressive violence — assault or theft — against another, and the use of violence to defend oneself and one’s property against such aggression. Aggressive violence is criminal and unjust; defensive violence is perfectly just and proper; the former invades the rights of person and property, the latter defends against such invasion.”
I don’t see how you could not make that distinction. Also, in case you missed it, earlier I did state that even though not all voluntary activity is market activity, all market activity is voluntary. And, even though not all coercion is government activity, all government activity is coercion. This is why I tried to stick to the distinction of voluntarism vs. coercion, because I knew that there was going to be some debate over market, non-market activity. I’ll admit, I still fell into it more than I would have liked, but that’s how it goes sometimes. However, I don’t think i must make the distinction between just and unjust coercion, because I thought that that would simply be common sense.
Joseph,
Just because you think coercion is justified in a particular case doesn’t mean it stops being coercion.
Oh, look at me, Daddy! I’m so special! I can be ideology-free like my BFF Gene_Callahan! I can equate anyone’s arguments I see with arbitrary fallacies my BFF thought of, just because it makes my opponent look stupid! No justification needed!
Are you proud of me, Daddy?
@Michael J. Green,
As far as the scientific study of “Economics” goes you are right Michael, it should only include the material values of production and trade.
That being said, DK was going beyond that and categorically asserting that some material values are best “allocated” outside of “Economics” in the same way that spiritual values often are and he agrees with Krugman that the government has a role in DETERMINING which values those are, to which I pointed out that if the government can determine which material values should be allocated outside of economics then why should it not determine which spiritual values should be allocated inside of economics.
I have yet to hear any response.
Apparently, DK does not like to “give the time of day” to anyone who is impertinent enough to challenge is presumptions.
Challenging DK on his presumptions is rude and DK will not respond to rudeness.
Not true — he’ll (rather unproductively) respond to rude arguments that are *also* easy to refute, as it gives him a chance to score cheap victory, albeit at the cheap cost of inconsistency.
DK is like the Emperor with no clothes. He likes to make grand statements with profound and wide ranging implications all the while denying he is saying anything at all. I dont mind being the one to tell him he has no clothes, if he finds that rude then he should put more thought into the broader implications of his assertions.
Just don’t call him a statist…. Or, anybody else for that matter….
When someone asserts that the state should solve social or economic problems that it has nothing to do with its legitimate purpose, then that makes them a statist.
If it walks like a duck, quacks like a duck, then it’s a duck.
Identifying them as such brings clarity; if clarity offends then prepare to be offended.
I will make no apologies for that.
I was referring to the fact that when I called Mammoth a statist, Mr. Kuehn called me a bully for using such a word. I never saw it like that, I simply thought that I was using a descriptive word, completely devoid of any personal disrespect. If somebody calls me an Austrian, a libertarian, an anarcho-capitalist, etc, I don’t get offended, because those are the descriptive words that describe my philosophy.
I never understood how someone that believes fully in State action could be offended by being called a statist. What other word can I use?
What other word can I use?
ETATISM.
III. ETATISM
I. The New Mentality
The most important event in the history of the last hundred years is the displacement of liberalism by etatism.
Etatism appears in two forms: socialism and interventionism. Both have in common the goal of subordinating the individual unconditionally to the state, the social apparatus of compulsion and coercion.
http://mises.org/etexts/mises/og/chap3a.asp
ah. OK. I agree with you 😉
Thanks Bob, I have seen you talk of it before, and I have read Omnipotent Government (though it has been a while). It seems to me that etatism is more of a term used by liberals (in the Misesian sense) to describe those who wish to have a State, as the liberals do, but that they wish to use coercion and interventionism through State force. With that said, I am thinking that maybe statism is a word used primarily by anarcho-capitalists to describe those who not only believe in a State, but also wish to use the State in the same fashion as described of etatism.
I guess what I am getting at is that etatism and statism mean pretty much the same thing, but that statism is more apt to be used by those who do not believe in any State at all. Would you say that this is a correct interpretation of the nuance between the terms?
Eh, ran out of room. This is a response to M_F. I think that we agree that any voluntary of exchange is necessarily market activity, even if such exchange is intangible. However, the point that I was trying to make to Mr. Kuehn is that voluntary action in a world free of exchange (Crusoe) is a world of merely tradeoffs, and opportunities foregone. The primary distinction between voluntary activity and market activity is that of exchange, and that voluntary exchange is merely an extension of voluntary action, whereby there is more than one actor in the situation. Exchange between actors is merely the extension of the tradeoffs of the solitary actor.
Sure, I know the point you were trying to make, and I agree with that in principle, although in your context, I would have just used different terminology. I would have said voluntary exchange includes both interpersonal voluntary exchange (Crusoe and Friday), and autistic voluntary exchange (just Crusoe).
In my argument, I hopefully implied that by voluntary exchange, I mean voluntary interpersonal exchange, such that any voluntary exchange of property, ideas, love, whatever, all of it is the free market.
Just because the government doesn’t make a specific set of rules for who you can love, and who you become friends with, that doesn’t mean the market for love and friendship does not exist. They’re spontaneous. Voluntary exchange of property is also spontaneous.
“I would have said voluntary exchange includes both interpersonal voluntary exchange (Crusoe and Friday), and autistic voluntary exchange (just Crusoe).”
If I remember correctly, that is exactly how Rothbard described it in MES. In either case, I think that that is the confusion in the use of the term “market”, that Austrians have a much broader definition, one that is merely an extension of autistic exchange in which there is more than one actor. Mr. Kuehn is obviously not stupid, he just doesn’t get where we are coming from in this respect.
That is why I explained it the way I did.
In the context of this discussion, I think this excerpt by Ayn Rand makes some interesting observations between the way liberals in general percieve values vs. the way conservatives in general percieve values.
It certainly was apparent to me when I read DKs list of values that a “free market” was not good at allocating.
http://aynrandlexicon.com/lexicon/conservatives_vs_liberals.html
In this video clip, David Mamet explains political civility as stating back to your opponent what you understand that he believes and your opponent agrees that you have properly stated his position (and vice versa). It seems to me that this is necessary before a debate can even begin.
http://blog.mises.org/17234/david-mamets-metamorphisis/
I don’t think any Keynesian or MMTer can explain the Rothbardian view in such a manner. I’ve never seen it.
All of this fussing about the meaning of “market” proves it.
In this video clip, David Mamet explains political civility as stating back to your opponent what you understand that he believes and your opponent agrees that you have properly stated his position (and vice versa). It seems to me that this is necessary before a debate can even begin.
At the risk of being hubristic, I believe that I could describe the Rothbardian position in such a way that a Rothbardian would agree it is accurate.
One the other hand, Bob, with all due respect, you do not seem to be very good at describing views of non-Rothbardians in ways that they think are accurate. I think this may be a “first, remove the plank from your own eye” situation.
Since I’ve been waiting four decades for the first non-Rothbardian to accurately and fairly describe my views to me, I concede that I no longer even make an attempt at a description of my opponents’ views that they might find accurate. They can go first (which would be a first).
Over at the Yglesias blog, I’m described as a virulent racist of the Tom Woods/Tom DiLorenzo/Ron Paul variety and in Texas I’m described as a “Muslim lover”. Let’s just say I’m not pleased.
BTW, while we are on the topic of describing our opponents’ views, the origins of the “progressive” attitude is explained in this excellent little Rothbard piece:
http://mises.org/daily/2225
This is further explained today by Justin Raimondo:
http://original.antiwar.com/justin/2011/06/09/glenn-greenwalds-sincerity-meter/
If the solution to our problems is more government control domestically, then why not extend that general principle when it comes to foreign affairs? Why shouldn’t the US federal government extend its power and influence to uplift the poor teaming masses of, say, Libya – or Afghanistan – and fight until every last one of them has the rights that each and every American citizen has – including the “right’ to healthcare and public education?
The logic of modern liberalism leads us, inevitably, to interventionism, and not only that, but it implies a particularly moralistic and on-your-high-horse variety of “liberatory” liberalism – the sort we were treated to in the run-up to World War I, when Woodrow Wilson declared that we had to go to war to “make the world safe for democracy.”
Daniel just to elaborate on this point:
Once again – this is precisely why I keep referencing the RAE. That is voluntary, non-market action. Because the editors and referees at RAE know damn well that the market would produce crappy scholarship.
Bob still hasn’t told me how his use of peer review rather than the market to review peoples’ papers is any different from what Krugman is talking about here.
So let me explain exactly what the analog of Krugman’s position on health care would be, applied to the RAE: Krugman wouldn’t be content to let people voluntarily exchange their property in some market, some “non-market” ways, in order to crank out the journal. No, Krugman would say, “There are positive externalities and free riders all over the place. We will point guns at every fan of Austrian economics, extract $10 per month, and then mass produce the RAE. Furthermore, if we discover that anybody at the print shop enjoys reading the occasional article, we will dock his pay. If he tries to quit his job, we’ll shoot him. The system wouldn’t work unless we crack down like this, but when all is said and down, this will be a much cheaper, more efficient way to produce the RAE and deliver happiness to fans of Austrian economics.”
So yes Daniel, that would be an anti-market approach to the RAE. And that is roughly what Krugman is proposing with “reforming” US health care.
Krugman would also note that the RAE would save on advertising costs.
I am both amazed and amused at the studied inability of some of the commenters here to tell the difference between ordinary market exchange and other sorts of voluntary non-market activities (such as peer review, dating and courtship, etc.) It reminds me of the old joke: Do you know the difference between a bathroom and a living room? No? Then you’re not getting invited to my house anytime soon.
I think it’s funnier if you use “toilet paper” and “drapes.”
Imagine a private Rothbardian village with private contractual rules against advertising medicine for Krugmanite reasons. Is that “the market” in action or not?
Why isn’t the dating market “the market”?
Why isn’t the dating market “the market”?
For some, it is.
For others, that is a semantic confusion.
Do you think Borat is Rothbardian?
Tell me BA,
If all “exchanges” presuppose values, then from a political point of view, why should one set of exchanges be treated differently than another? DK and Krugman are explicitly asserting that it is proper for the government to not only define which types of exchanges best belong to ordinary markets or non-markets (RAE, houses, spouses) but they also go further and demand that “ordinary” markets require even more regulation to ensure a “proper” allocation, as he calls it.
On the other side of the spectrum, traditional conservatives of the religious type also like to use the government to make the same types of distinctions only they tend to focus on defining and regulating the “non-markets” exchanges like gay marriage, porn and abstinence.
Given these facts regarding the political stances of the dominant ideologies operating in our Republic, don’t you think it is of utmost importance to identify which ideological premises are driving these types of issues? I do, and it’s often a frustrating process when most people do not understand the logical consequences of their own ideas, let alone the broader philosophical premises that birthed them.
I don’t think blackadder has a consistent concept of trade.
Dating, or courtship, or whatever you want to call it is the original human trade. In fact the “first profession” manifested due to scarce resources within this market.
lol
In The Fatal Conceit, Hayek famously said that “if we were to apply the unmodified, uncurbed, rules of the micro-cosmos (i.e. of the small band or troop, or of, say, our families) to the macro-cosmos (our wider civilisation), as our instincts and sentimental yearnings often make us wish to do, we would destroy it. Yet if we were always to apply the rules of the extended order to our more intimate groupings, we would crush them. So we must learn to live in two sorts of world at once.”
I suppose that for some of the commenters on this thread, Hayek is being very foolish here. Not only should we apply the same rules to the micro-cosmos as to the extended order, but in fact we already do do this. Indeed, the idea that there could even be different sets of rules for the two orders seems to utterly baffle some of the people on this thread (after all, it’s all just market exchange, right?)
Think of it like this, BA; it’s a fish-out-of-water comedy set in contemporary small town america……. coming to a theater near you this fall….
“The Rothbardians”
establishing shot: steadi-cam pans across a leafy Cleveland suburb just meters above roof level, gradually descending to the street, panning along the sidewalk past sprinklers watering emerald lawns and tulip beds…. coming to rest eventually on
RG ROTHBARDIAN, and his husband RS ROTHBARDIAN, two plump, balding men in their forties, wearing plaid pastel tee-shirts and matching white jodphurs.
They walk in sync, until they hear a tiny tweeting noise….
RG: What is that noise, RS?
RS: Look! (points) a baby bird has fallen from its mothers nest!
both stoop over the chick as it plaintively cheeps. The trees are tall, and the nest is well out of sight.
RG: On private property, RS.
RS: Don’t be a pedant. I don’t see anyone claiming it. Its momentary location is incidental, anyway!
RG: I guess you are right. Nobody has yet mixed their labor with this chick, making it an unowned resource! Do you realize what this means?!
RS: We can TAKE it!
RG: ONE of us can take it: ME. (takes bird and puts it in his breast pocket.
Both rise.
RS: I demand a finders fee. I have a legitimate interest in that bird!
RG: Very well, I will cook lunch for us both.
RS: Crepes?
RG: It is agreed.
RS: HA! you’ll never sell that runty chick for a profit, RG; you’re a horrible entrepreneur.
RG: We’ll see.
with that, the pair resume their walk…
………………………………………………
Don’t leave us in suspense! What happens next?
He fixes the cable.
They head to the corner bar (their original destination) to watch the Indians lose their arse to (insert team here), proceed to get wasted and leave at closing time. RG walks into his house only to see his wife standing there fuming. Before she has a chance to speak, RG pulls the chick out of his pocket and presents it to his wife. She is surprised and overjoyed (she has a thing for birds) gives him a kiss and says, “now, let’s go upstairs, I have a present for you”.
YES, psychic profit. And, RS said that he was a bad entrepreneur.
Yes, Hayek is being very foolish in this statement.
There are no such things as micro-cosoms or macro-cosoms. There are only trade vs. coersion; property vs. the state.
Corollary: love is the perfect trade
I seemed to have missed the part where he said that RS is your husband. Doh! Oh well, I’ll take creative license and make this a world where polygamy is legal and you’re a switch-hitter. There fixed.
Though I do find it interesting that he would have said that. I have nothing against consensual adult relationships of any type, and I don’t know your personal preference in mates, but I can only assume that he was attempting to take a jab at you guys, and in poor taste.
no-no, it’s a sham marriage, or a marriage of convenience if you like that better.
Those rules are called principles, perhaps you might have heard of them. Applying principles to concretes is the only way to identify and evaluate any given perception. If that is to hard to understand then perhaps I could recommend some reading for you.
“How is it that choosing ones friends or lovers is somehow different than choosing ones car or house?”
It will be easier for us to explain this to you, if you tell us whether you have never had a friend or lover, or never had a house or car.
How is it that choosing ones friends or lovers is somehow different than choosing ones car or house?
For instance if you tell this to your friends and lovers they might be hurt or disappointed (unless they are also automata), but your car or house won’t.
It’s easier to explain if you’ve been denied a car/house purchase or friendship/lovin’.
You’ll find that bidding $500 for a new Lotus Evora is about the same as Argosy trying to get laid using his sense of humor.
Agrosy,
Ill tell you if you tell me that your friends and/or significant others like you for the value you bring to their lives or if they just pity you because you have nothing to offer them. Once you figure this out you will be able to understand what I meant by my question.
This goes for you too MaMoTH and RG.
If you dont understand what I meant by my rhetorical question
“How is it that choosing ones friends or lovers is somehow different than choosing ones car or house?”
then you should reflect on the values that you offer to your friends and loved ones, if you have any.
Too late. My car just left me.
well, thats a darn shame. perhaps you were not worth its trouble.
Once one bothers to understand the broad general differences between “Power and Market” (to coin a phrase), there are clearly zillions of different specific types of activities that might arise on the “market” side of the equation. Volunteering to help the poor is different than being a commodities trader and isn’t generally considered to be a “market” activity but in Rothbardian terms, it is. The big political issue is with the never-ending claims of the etatists that there exists some alleged crisis that requires the intiation of force (power) against the voluntary (market) sector. That is always the issue. These Rothbardian categories are just not that complicated (until someone makes at attempt at obfuscation, probably on purpose).
http://www.lewrockwell.com/rothbard/rothbard168.html
Hey Bob, I just want to mention that you are fantastic when it comes to posting articles and such, things that I don’t often get a chance to read otherwise. While it is true that I often read a great deal of Austrian literature (as well as other topics), I primarily read books, which is very time consuming and often derails me from the more concise and to-the-point articles that have been written in the past (plus, I hate reading anything on the computer screen).
While I have been reading many of the linked articles that you post, I have also been saving them to my “data” file on the computer. I find it strange that you can always bring up an article or other media that is pertinent to the discussion at a drop of the hat, as if you have a secret index that says “this is the topic, here is the article”. But, then I remember that you’re a lawyer, and that is the skill that is required of such an occupation.
Anyhow, thanks for taking the time to do it, because it has been an immense aid in my taking the more spatial aspects of Austro-Libertarian theory constructs that one encounters in treatise form and understand it in a more specialized and/or distinct form; that of particular topics of debate.
In fact, I now see how I could have taken a different path in the debate displayed above had I been aware of some of the arguments of the material that you’ve presented, or that I simply would have come to different conclusions of my own had I been presented with such material. This is not to say that tomorrow I will be able to debate the same points with complete clarity, only that I have seen some of the errors of my logic, and that it is often strange how one can get so focused on only one aspect of a topic only to be reminded of what they have already learned (or, the finer details thereof).
Funny how the mind works…
“Just because you think coercion is justified in a particular case doesn’t mean it stops being coercion.”
I never said that it did. However, do you not agree that there is a moral and philosophical distinction between just coercion and unjust coercion? That one is necessary to maintain a free society, and that the other is the inverse of a free society? In my mind there can be no other counter to offensive aggression than that of defensive aggression, and that one is just while the other is not. I took it for granted that everyone would understand my use of the term in the former sense when I noted that coercion was in opposition of voluntarism, and that the use in the latter sense is justified; apparently I was wrong to make that assumption.
Joseph,
What you said was “[i]f there is coercion, then any sense of market activity, or the market, is entirely lost.” When I pointed out that coercion is in fact necessary for the existence of markets (because you’ve got to protect property rights), you responded by saying that you should have said “free market” instead of “market.”
This isn’t just nitpicking. What you’ve been saying over and over is that the difference between the market and government is the difference between voluntarism and coercion. But that’s not right. Markets can involve quite a bit of coercion, and indeed presuppose at least the threat of it, just as does government. The difference is not that one involves coercion while the other doesn’t, but that one involves what you view as unjustified coercion while the other involves justified coercion.
However, do you not agree that there is a moral and philosophical distinction between just coercion and unjust coercion?
Yes. Obviously.
Okey dokey, I’ll take that.