04 Jan 2014


Potpourri 55 Comments

==> Not only do they have huge audiences, but Lew Rockwell and Alex Jones have awesome radio voices.

==> Tom Woods and I discuss ObamaCare. We’re not fans. (Hopefully no one will get pregnant in 2014.)

==> My understanding is that I make an appearance in this BitCoin discussion.

==> The Lara-Murphy Report interview with Gerald O’Driscoll.

==> Jeff Tucker on the Nutcracker.

==> Richard Ebeling isn’t afraid of (market) deflation.

==> I thought this was an interesting article on sexism in science. I too find that people underrate my intelligence in light of my physical attractiveness. (Oh c’mon you know I had to make a joke like that.) The part about the obituary was especially interesting, because I could see someone arguing that during a transition phase, people have to battle the stereotypes by writing such pieces. However, judging by his comments, I don’t think that’s what the obituary writer was doing; he “just doesn’t get it” as the feminists would say. (I’m not being sarcastic, I think there was an issue with his obituary, and that he doesn’t see why it reflects a double standard.)

55 Responses to “Potpourri”

  1. Daniel Kuehn says:

    I can’t speak for the other 300 million, but we’re sure as hell not getting pregnant in 2014.

  2. Lord Keynes says:

    From Richard Ebeling’s article:

    “Hutt also emphasized that whenever a price or wage that is too high is lowered closer to its equilibrium or market-clearing level, suppliers of those goods and services increase their sales and potentially earn higher income. Their higher incomes from pricing their goods and services more correctly, in turn, enable them to increase their demands for other goods and services and thus start a process of expanding the circle of employment and production opportunities in the market. Market-guided pricing puts the unemployed back to work and releases the flow of demand for a growing circle of goods in the economy. “

    lol… And yet your blog has people like bob roddis who **deny** that tendencies to market-clearing prices and wages are even a part of Austrian economic theory.

    And you yourself Bob Murphy simply ummed and ahhed about whether the real world has the necessary tendencies last time you said anything on this subject.

    This is why Austrian economics has a massive credibility problem: you need the real world market to have this strong tendency to market clearing, but the empirical evidence shows it does not have such a tendency. Your inability answer critics on this issue speaks volumes.

    • Tel says:

      … the empirical evidence shows it does not have such a tendency

      Egats! Where did you get that from?

      Not that I’m overly happy with your general approach to analysing empirical evidence but markets converge to at least relatively stable outcomes all the time.

      If you are going to quibble over whether I can prove a global optimum then I’m just going to point out neither can you, nor anyone so far. The very question of how you would go about detecting a global optimum is undecided, and for that matter probably undefinable.

      • Lord Keynes says:

        The issue isn’t whether an economy reaches a general equilibrium state; no economists — not even Walrasians — think that.

        The issue is whether real world prices actually are flexible and are largely set by dynamics of supply and demand, as Austrians think, and generally move towards market clearing levels in a flexible way so that the real world economy has **tendency** to supply and demand equilibrium in product markets and the labour market.

        But the reality is that most prices are administered prices. E.g., administered prices account for roughly 70% to 85% of US industrial prices and 54% of prices in the Eurozone (though this is likely to be an underestimate).

        Administered prices are set on average unit costs plus a profit market. They are simply not prices that will tend to market clearing because they are generally not even flexible with respect to demand. Even in recessions they tend to rise, not fall.

        Therefore Austrian theory of the sort as held by Ebeling and Hutt is grossly unrealistic.

        • skylien says:

          “Administered prices are set on average unit costs plus a profit market. They are simply not prices that will tend to market clearing because they are generally not even flexible with respect to demand. Even in recessions they tend to rise, not fall. ”

          In other words, nothing would speak against having the government administering those prices directly by decree, correct?

          • skylien says:

            LK, can you answer that straight forward question?

            • Lord Keynes says:

              As long as a government ensured that the industries in question obtained a proper profit mark-up which the business people were happy with, and they adjusted their administered prices when necessary to cover total average unit costs changes, then both in theory and practice governments can set such administered prices, yes.

              The proof? The Second World War: the US Office of Price Administration (OPA) did more or less what I describe above, and John Kenneth Galbraith said explicitly after the war that it was relatively easy to control administered prices:

              “The phenomenon of inflexible prices had been well-observed before the war, but so far as I am aware (and for good enough reasons) no one had observed that this inflexibility would facilitate wartime control. …. I am tempted to frame a theorem that is all too evident in this discussion: it is relatively easy to fix prices that are already fixed.”


              • skylien says:

                Ok, then if already up to 80% can be taken care of by the government why not the rest as well? I mean if according to your opinion it works for the greater part of the economy I see no reason to stop there.

                You already have established that industries don’t need “flexible” prices that respond to demand because the government can take care of, so they should be dispensable for the rest of the economy as well. The reason that some industries respond accidentally to demand changes shouldn’t stop you. Would you agree?

              • Lord Keynes says:

                “You already have established that industries don’t need “flexible” prices that respond to demand because the government can take care of”

                That isn’t the argument at all. I said the government **could** do it, not that government *should* do it. Evidently these subtle differences escape you.

                The price administrators in private businesses already set their prices, and outside of extraordinary situations — such as war or possibly serious supply side shocks — there is no need for government to set their prices and simply replicate what they already do.

              • skylien says:

                Sorry to imply that you would say the government should do it.

                I just want to know if according to your argument the government could do it at least as good as the market for the whole economy. I see you not making/implying any arguments that would deny that possibility. So, was it possible for the whole economy? And if not why not.

              • skylien says:


                So, *could* the government do it, or whould that cause certain problems? I see no reason to evade that question.

        • Lord Keynes says:

          Yes, we’ve been through the nonsense of your incredible inability to grasp basic Austrian theory, such as the alleged market tendency to supply and demand equilibrium via flexible prices.

          E.g., when Mises said this,

          “The changing prices of the market bring supply and demand into equilibrium … interventionist policy prevents the attainment of an equilibrium situation.” (Mises 2002b [1933]: 209).

          “Price control measures paralyze the working of the market. They destroy the market. They deprive the market economy of its steering power and render it unworkable.

          The price structure of the market is characterized by its tendency to bring supply and demand into balance. (Mises 1998 [1940]: 26).

          “The aim of price control is to decree prices, wages, and interest rates different from those fixed by the market. Let us first consider the case of maximum prices, where the government tries to enforce prices lower than the market prices.

          The prices set on the unhampered market correspond to an equilibrium of demand and supply.” (Mises 2010 [1944]: 61).

          This is a very similar idea to the one Ebeling and Hutt are supporting.

          But Bob Roddis wouldn’t understand his own Austrian theory if Mises personally beat him over the head with a thick copy of Human Action.

          • Major_Freedom says:

            “Yes, we’ve been through the nonsense of your incredible inability to grasp basic Austrian theory, such as the alleged market tendency to supply and demand equilibrium via flexible prices.”

            Roddis has been trying to school you on that very subject. And yet you still don’t understand it. You are in no position to say that Roddis doesn’t get Austrian theory.

          • Matt Tanous says:

            Because it isn’t like Austrian theorists have dealt with fixed prices. Except they have. And come to the conclusion that fixed prices stop being prices once they are locked in, but instead become speculative contractual arrangements. Having a fixed price that lets me buy iron at the current price in six months is basically no different than buying it now on interest-free credit and holding on to it for six months. It does not stop markets from clearing at all.

    • Hank says:

      “Every seller of a commodity or service wants to cover his costs of production and receive something over and above such costs if possible. He spends long hours keeping records and, with rare exception, believes that he actually sets the price of his goods and services by adding a margin above his expenditures.

      The truth, however, is that all recorded costs of an item are washed out and rendered irrelevant by the actual market price at which that item is traded—a price determined by the competitive forces of supply and demand. That price becomes the new “cost” of consideration to the next user, regardless of how much labor he or any prior owner expended on that particular item. And if he sells it in turn to another willing buyer, the latter’s demand will have as much to do with determining the price as do the suppliers recorded expenses. Cost, of course, influences the supply side of the market and thus the price; but costs incurred do not determine price.

      To believe or to say that any item of commerce is but the sum of the costs incurred in producing it—a package of somebody’s prior labor—is to introduce a confusing irrelevancy into the bargaining process that determines the price at which free trade takes place. The only relevant factors in a voluntary trade are that each party to the transaction, at the moment, values what he receives more than he values what he gives. Each thinks that he gains from the trade, no matter what costs were incurred to produce what he gives or gets in exchange.

      That’s all there is to the subjective theory of value. It takes into account the demand as well as the cost of production. And this determination of prices in the open competitive market affords the current running record of costs and returns that a businessman needs in order to calculate profit or loss and judge whether or not to continue a particular business activity.”

      – Paul L. Poirot

    • Hank says:


      “Government pricing and government contracts, including the payment of subsidies of any kind, always are on a “cost-plus” basis because in those cases the efficient market method of pricing has been prohibited. Supply and demand are ruled out of the determination: the customer is led to believe the resources involved are not very scarce— relatively free; the supplier is guaranteed that taxpayers will cover his costs, whatever they may be. Such socialistic pricing affords no effective method of economic calculation by which to measure success or failure, profit or loss, conservation or waste. Thus, socialists are foredoomed to stumbling in the dark with their outmoded labor theory of value—the sum of costs.”

      -Paul L. Poirot

    • Hank says:

      Therefore, Lord Keynes, your argument would only be valid if we were talking about actual prices determined by the unhampered market. Instead, you are conflating this with prices directly established through government intervention.

      • Lord Keynes says:

        No, Hank, most private businesses and firms in every capitalist economy for which we have evidence set their prices based on average unit costs of production plus profit mark-up:


        Empirical reality is difficult for Austrians to understand.

        • Major_Freedom says:

          Cost plus markup pricing is an inevitable outcome of marginal utility pricing (direct supply and demand of commodities).

          See Bohm Bawerk.

        • Hank says:

          Conveniently, in your article, you have yet to point out a specific example of such an administered price (in the unhampered market, that apparently is not established through supply and demand) that exists in reality. You just make the assertion that they exist.

          Every instance of these prices are complex on their own. Making generalizations enables you to just make make blanket assertions which have no relation to real world. So much for your scientific method.

          • Lord Keynes says:

            “Conveniently, in your article, you have yet to point out a specific example of such an administered price “

            lol… the numerous surveys cited in the post give you 100s/sometimes 1000s of firms that tell us directly that they set prices for their products as administered prices.

            • Hank says:

              I does not follow logically that these prices are not determined by supply and demand (if no government intervention is involved). “All four—demand, supply, cost, and price—are interrelated.” -Hazlitt

              In order to show this empirically, you would need to point out a specific example, for which all the relevant statistics probably will not exist, further showing how insufficient your empirical method is for economic science.

        • Bob Roddis says:

          Without the wisdom of Lord Keynes, we all used to think that people set their prices below cost of production. Such insight.

          • Lord Keynes says:

            Yes, roddis, you reveal your sheer ignorance of Austrian economics every time you open your mouth:

            “”There is no reason why prices cannot fall low enough, in a free market, to clear the market and sell all the goods available. If businessmen choose to keep prices up, they are simply speculating on an imminent rise in market prices; they are, in short, voluntarily investing in inventory. If they wish to sell their “surplus” stock, they need only cut their prices low enough to sell all of their product. But won’t they then suffer losses? Of course, but now the discussion has shifted to a different plane. We find no overproduction, we find now that the selling prices of products are below their cost of production. But since costs are determined by expected future selling prices, this means that costs were previously bid too high by entrepreneurs.”

            Murray Newton Rothbard, America’s Great Depression (5th edn, 2008), pp. 56-57.

            • Major_Freedom says:

              You should have also bolded this part:

              “We find no overproduction, we find now that the selling prices of products are below their cost of production. But since costs are determined by expected future selling prices, this means that costs were previously bid too high by entrepreneurs.

              Well, the incentive to reduce investment would reduce costs, such that selling prices can be reduced without incurring losses.

              There is no reason why selling prices can’t fall if costs fall. You’ve already admitted that costs fall when there is a fall in demand, because it reduces investment spending.

              You’ve conceded the theory.

        • Sam says:

          THAT’S a refutation?
          That writer is asserting that supply and demand don’t determine final prices, because the seller gets to write a number on a price tag in modern retail, which is such an obtuse misunderstanding of how prices are produced…
          Businesses get to declare their asking price, but the price is bid by consumers accepting or rejecting it, ie, consumer behavior produces an effect on inventory levels that in turn signals suppliers whether they set their price too high or too low relative to the market-clearing price. That’s an empirical reality a lot of guys know who have never read a page of economics: “The shelves are empty; post a higher price before bringing out the next batch!” Is the most basic business behavior in the world. Of course, if one is sufficiently removed from the empirical reality, it’s easy to imagine that because the business has a strategy for setting its initial asking price in the absence of any such data (cost markup), that prices are an autocratic product of suppliers’ whims, but only if you ignore all the subsequent behavior of price alterations and discounting that produce the long term price–yes, even as seen on the price tag. If a product has usefulness to a consumer far below the cost plus markup price, do consumers wearily continue to consume it, because the seller has authority over price? No, their preferences *correct* the price and produce discounting by the frontline manager or salesperson. The relevant “empirical reality” isn’t that managers marked “yes” on those surveys (surveys lol). It’s the pricing practices actually observed in these markets, from start to finish, and one day’s honest work would reveal that pricing is just as subject to consumer preferences as to those of sellers.
          There’s plenty of things at work to obscure the working of the pricing mechanism (conventional prices, reselling, concealing discounts, the isolation of layers of management from each other, etc) but it’s always there. The fact that whoever’s answering those surveys don’t comprehend it doesn’t alter the situation; he’s going to run a discount in response to an overstock or ratchet up his asking price in response to bare shelves same as anybody else.

          • Lord Keynes says:

            “Businesses get to declare their asking price, but the price is bid by consumers accepting or rejecting it, ie, consumer behavior produces an effect on inventory levels that in turn signals suppliers whether they set their price too high or too low relative to the market-clearing price. “

            If not enough of the product is sold, what normally happens is that the production of the product is cut to match demand, not price.

            Like roddis, you do not even understand your own Austrian theory.

            ““The shelves are empty; post a higher price before bringing out the next batch!” Is the most basic business behavior in the world”

            Not necessarily at all.

            This is what is revealed by empirical reality: in the survey of 654 UK businesses, they were asked: what happens if there is a boom in demand which cannot be met from stocks or inventories?

            Most UK firms said they simply increase overtime of workers (as reported by 62% of firms), hire more workers (12%), or increase capacity (8%) to produce more output, rather than increase the price of their product.

            Only 12% said they would increase the price of their product (Hall, S., Walsh, M. and A. Yates. 2000. “Are UK Companies’
            Prices Sticky?,” Oxford Economic Papers 52.3: 425–446, at p. 442).

            You speak of empirical reality, but are contemptibly ignorant of it.

            • Hank says:

              You must be aware of the stupidity of this question. What if the company is unable to hire more workers? What if the raise in demand is accompanied by a million other statistics that could never be measured?

              The reason they answer this way is because this is what they would RATHER do, without relation to the actual reality.

              With all empirical evidence, because its impossible to have perfect knowledge about society, you are merely choosing to ignore certain factors.

            • skylien says:

              “If not enough of the product is sold, what normally happens is that the production of the product is cut to match demand, not price.”

              Sometimes I really think you cannot think two steps ahead..

        • razer says:

          My firm doesn’t do this. Your hypothesis has just been falsified. Time to start over.

          • Sam says:

            You probably should, you’d make more money. Also, can I have your firm’s information? If you’re insisting on an overprice, I’d like to offer to haul away your overstocks, since you don’t intend to ever sell them. If you’re insisting on too low of a price, I’d like to pick up some of your stock to resell at a profit.

            As to LK, empirical reality isn’t an executive’s declaration of what he would do in a hypothetical case, it’s the actual practices of businesses at the front line, and those do bear out my point. If a representative of a firm has the authority to increase worker overtime at the factory (assuming the person responding to these surveys even had a role in the decision making in such a case) he’s not the same guy deciding to put out the red tags in the retail store, which is where the shortage is first felt. That’s why surveys about firm behavior are meaningless; the whole reason there’s a firm is that no one person truly oversees the whole field of its operations. No one knows if the reason he never has to implement his solution to a problem is that the problem is fully solved in some department he doesn’t know much about.

            And of course it is possible for a firm to act all socialist and not use price coordination, and the result is simply waste, reduced profits, reduced employment, and reduced output. But it’s not impossible!

            • Lord Keynes says:

              “That’s why surveys about firm behavior are meaningless;”

              lol.. empirical evidence never proves anything, huh?

              • Hank says:

                For the record, (and it astounds me that Lord Keynes cannot grasp this) such a study is not measuring any economic actions that actually happen. The study asks (a hypothetical) what the firm would do under unrealistic conditions (a rise in demand while ignoring all other economic factors). Therefore, the survey has no relation to reality.

                You cannot even do empirical research correctly when you claim this is your primary method for economics.


              • Richie says:

                lol.. empirical evidence never proves anything, huh?

                Maybe, but as Hank mentioned, the survey is a “what-if” scenario. No behavior was actually observed, so it’s not empirical.


              • Buford T Justice says:

                Show us the “fixed” prices, LK. Self-serving statements by managers about what they would do in a hypothetical situation is not evidence that prices stay fixed in spite of changes in market conditions.

  3. Darien says:

    I’ll be the guy who doesn’t like Alex Jones’ voice, then. Walter Block, on the other hand, I could listen to all week long.

    • Major_Freedom says:

      Jeff Riggenbach is my favorite voice in Austrian circles. Every time I listen to one of his audio tapings, I imagine the scenario of wearing my housecoat, smoking a pipe, sitting by the fire, and sipping Cognac.

  4. GeePonder says:

    What if benevolent sexism isn’t pathological after all, and needn’t be somehow cured. I mean ‘mother’ isn’t just a person but is in fact a kind of archetype or Platonic ideal type. ‘Father’ isn’t just a word or a person but rather is an archetype or ideal type. What if this is just how the human mind thinks?

    Why not rewrite a man’s obituary to stress his fatherhood above his professional accomplishments instead of rewriting a woman’s to stress her professional accomplishments instead of her motherhood? Doesn’t the bias work both ways here? Who is to say which is the correct bias and the correct obituary? Weird.

    What a screwed up world where stressing a woman’s motherhood and family commitment or a father’s fatherhood and family commitment above their employment is seen as a diminishment. Maybe our priorities are simply out of whack?

  5. Ash says:

    I’m not sure how I feel about this benevolent sexism stuff, but to me this is the most damning indication of sexism in the (hard) sciences.


    • Darien says:

      And yet, there are so many possible explanations other than “scientists hate women.” Here’s one, just off the top of my head: these people are familiar with the fact that governments and schools are trying to increase the number of women in science positions (due to crazy), and thus are aware that female students get the dubious “benefit” of reverse discrimination, thus creating a situation where an identical GPA is likely to indicate better performance from a male student as versus a female student. And so they’ll view the male as having a better grasp of the fundamentals.

      Is this particularly less plausible than the ‘scientists all hate women’ theory?

      • Harold says:


        Actually nobody said scientists hate women (except you). That is a straw man. The finding was that scientists rated a women as less competent than a man even though the evidence was exactly the same. This could be due to the scientists actually correcting for a hidden bias you suggest – that a less competent woman is more likely to get the same grades and have the same experience. Or it could be due to unconscious gender bias in the assessor. There is evidence to back up the latter – those that scored higher on a well established test that reveals gender bias were more likely to rate the woman as less competent. Your idea is pure speculation.

  6. Bob Roddis says:

    We’ve been over this so before many times. Why go over it again? And again?

    Can you sit in an armchair and use deduction from the action axiom to determine how all prices are actually set in real world capitalist economies and with apodictic truth?

    Answer: NO.


    LK has run down this intellectual cul-de-sac as his final answer to the Austrian problem. And it’s all he’s got left. It’s over. We’ve won.

  7. Bob Roddis says:

    For the newbies out there, all of LK’s massive research has resulted in “administered prices debunk Austrian theory”.



  8. Bob Roddis says:

    Jeff Tucker’s piece on The Nutcracker is very interesting. We are now upon the 100th anniversary of both The Fed and WWI. Thanks to the Tom Woods radio show, I learned about Richard M. Gamble and purchased his excellent book “The War for Righteousness: Progressive Christianity, the Great War, and the Rise of the Messianic Nation”.


    I was unaware of the extent of mainline Protestant support for both “progressive” economic policy or especially their extreme support for the US entering WWI against Germany based upon explicitly “Christian” rhetoric. The debate on the US entering WWI was held in Congress Easter week 1917 and the final vote taken on Good Friday which was not an accident. The “progressives” of today that we know and love have simply ditched the “God” portion of their message but it’s pretty much the same concept. They are the anointed ones chosen to stamp out “sin” as they define it everywhere and establish the Kingdom of God on earth. But this time, without the “God” part.

    • Hank says:

      Another really interesting revisionist look at World War II is Ralph Raico’s lecture that recently came on youtube and you probably already saw:


      • Hank says:

        It includes much more than World War II but that part was the freshest in my mind.

    • Bob Roddis says:

      In March 1979, Ralph Raico wrote in Libertarian Review:

      What we have with Trotsky and his comrades in the Great October Revolution is the spectacle of a few literary-philosophical intellectuals seizing power in a great country with the aim of overturning the whole economic system — but without the slightest idea of how an economic system works. In State and Revolution, written just before he took power, Lenin wrote,

      “The accounting and control necessary [for the operation of a national economy] have been simplified by capitalism to the utmost, till they have become the extraordinarily simple operations of watching, recording and issuing receipts, within the reach of anybody who can read and write and knows the first four rules of arithmetic.”

      With this piece of cretinism Trotsky doubtless agreed. And why wouldn’t he? Lenin, Trotsky, and the rest had all their lives been professional revolutionaries, with no connection at all to the process of production and, except for Bukharin, little interest in the real workings of an economic system. Their concerns had been the strategy and tactics of revolution and the perpetual, monkish exegesis of the holy books of Marxism.

      The nitty-gritty of how an economic system functions — how, in our world, men and women work, produce, exchange, and survive — was something from which they prudishly averted their eyes, as pertaining to the nether-regions. These “materialists” and “scientific socialists” lived in a mental world where understanding Hegel, Feuerbach, and the hideousness of Eugen Duehring’s philosophical errors was infinitely more important than understanding what might be the meaning of a price.


  9. Gamble says:

    I wish Free advise has an open thread or lounge. Maybe that would be to much anarchy for Bob?

    Well anyways, was smart money trying to run from metals to bit-coin and growth stocks? Circuit breakers are a joke. They should be abolished. Free the markets, abolish circuit breakers.


    • Gamble says:

      Additionally, if circuit breakers are such a great idea, why no upwards circuit breakers?

  10. Matt Tanous says:

    On that article regarding “benevolent sexism”:

    “affection directed toward women” – if that is sexist, we’re all screwed

    “serves to justify women’s subordinate status to men” – oh, I see. Complimenting you on your looks is the same as saying you are inferior and subordinate. Dang. I’ve had ladies compliment me before. I guess they’re all sexist and I better become a men’s rights advocate now.

    “the belief that women are “delicate flowers” who need to be protected by men” – So I can punch women now? After all, I can punch men in jest. I wouldn’t want to treat women like “delicate flowers” who can’t take a playful punch in the arm!

    “the notion that women have the special gift of being “more kind and caring” than their male counterparts” – Women are more caring TO MEN. And men are more caring TO WOMEN. I wonder why that might be….?

    “But the problem here is really that if “Yvonne” were “Yvan,” the obit would have looked fundamentally different. If we’re talking up the importance of work-life balance and familial roles for women but we’re not also mentioning those things about men, that’s a problem.”

    I disagree with this. I think the only reason this really exists is because men often still take the lead in terms of careers. She followed her husband from job to job, it says. Meaning that, to the pair of them, they made the choice that she be a mother first and have a career second.

    I fully expect that men who follow their wives from job to job have similar obits. Well, except that can’t really happen because of something called “pregnancy” and “maternity leave”. There are valid, sensible reasons that women make less than men without having taken over the workforce due to the vast savings one can make from employing women instead….

    Benevolent sexism is bad…. until it is actually beneficial to the women, apparently. I don’t see them talking about removing affirmative action setups, sexual harassment case bias (women are more likely to be believed), maternity and pregnancy leave agreements, men paying for dinner dates, men being acceptable victims of domestic abuse, and so forth.

    • Ken B says:

      Tannenbaum, who presumably had a choice, was careful to provice SA with a picture of herself, looking very attractive.

    • Matt M (Dude Where's My Freedom) says:

      A sub-contractor for a federal agency who deliberately uses people in government uniforms (to implicitly suggest it’s a government checkpoint) hardly qualifies as “private”…

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