18 Aug 2016

Provocative Potpourri

Potpourri, Rothbard, Shameless Self-Promotion 16 Comments

==> Tom Woods has an ensemble on to explain why Murray Rothbard was important. And if you protest, “Why are you guys so sectarian?!” all I can say is, “They started it!!”

==> Oh, now that I’ve posted my sample Liberty Classroom lecture, I don’t mind posting this Contra Krugman episode where we mention the course. (We also discuss some NYT columnist.)

==> You hear people say stuff like, “Don’t feed the trolls.” But that’s because they are not familiar with the work of a master.

==> I don’t think this is trolling per se, but c’mon… This is why you keep coming back for more, even if you’re a statist atheist.

16 Responses to “Provocative Potpourri”

  1. Tel says:

    I’m not trying to be provocative here, but I did finish reading your book “Choice”.

    The explanations are clear but the concepts are a bit difficult, it isn’t a beginner’s book but hopefully it will help a lot of people to grasp these things.

    Even after reading that and thinking about it, I still don’t accept that interest rates have absolutely nothing to do with the physical productivity of capital. Here’s my first argument:

    Suppose, you have a bunch of people who have a time preference at 5% per annum, who could potentially reduce their consumption and save/invest in a capital project if the opportunity comes along.

    As luck would have it, a proposal does come along, with a low risk return estimated at 4% per annum… but this project cannot raise any money because no one wants to sacrifice consumption for such a low return.

    Well clearly, the physical capabilities of this project were significant, because that made the difference between getting backers and not getting backers. Let’s further suppose that some very clever businessman goes through the project plan with a fine tooth comb, and finds places to trim the upfront costs, maybe get the expected return up to a risk adjusted 5.5% per annum… now it’s viable in that market environment.

    So if you go around and look at all the capital projects underway, you would find a strong match between the rate of return on those projects and the time preference of the population who are saving. However, that’s because you are NOT looking at the rejected projects that never got started. Kind of a seen and unseen situation.

  2. Tel says:

    Just while it’s on my mind, this also bugs me… the idea that economic theory does not make any predictions is incompatible with the “action axiom” in the following way:

    An individual wants to take action in order to achieve some outcome, this always requires both that the individual has some way of knowing how close he/she is towards their desired goal, and that the individual has some idea of which action will bring them closer to their goal. Unless both of those are available, choice of action is arbitrary.

    Thus, if economics provides nothing from the point of view of prediction, how can action be linked to outcomes? Let’s look at an example: someone might come to an Austrian economist asking for what could boost entrepreneurial activity and job creation, so the Austrian economist puts forward a theory that too much government spending and regulations are holding back new business creation. Well there’s already a prediction implied here that to take action (reduce government spending) delivers an outcome (new business growth and job creation). Without that connection between action and outcomes the whole thing is a waste of time.

    I can respect that the economist often will not be able to provide an absolute prediction in terms of the entire state of the economy at some future stage… but that level of precision is not necessary. At least a relative prediction of which general direction you going is a minimum requirement I would have thought.

    • Major.Freedom says:

      How do you know what “predicting” even means?

      • Tel says:

        I’ve always understood the word “predict” to mean that you have a model (no model is perfect, so therefore you have an imperfect model which might be a bit better or worse) and you would use this model to gain understanding of what is most likely to happen under various scenarios.

        A simple model would be, “The bus comes at 7AM” so using that model you could predict that if you want to catch the bus you need to get to the stop before 7. A slightly better prediction might be that some days it comes 10 minutes late, especially on a Friday… and so you could get into more and more detail.

        Suppose there’s an earthquake and you want to know if the bus is coming that day. You have never been in an earthquake before but you have some mental model that services are often disrupted, so you would predict that the risk of the bus not coming is higher that day, so waiting at the bus stop is probably not useful.

        I would say that the core of being able to make decisions at all is to have some idea what’s going to happen if you do that. Without that concept, what would you base your decision on?

      • Tel says:

        Here’s a quote from the early section of Bob’s book, under the heading “An Acting Individual Thinks He or She Can Influence the Future “

        An acting individual must have some underlying theory of cause and effect, where the individual’s can be the trigger to activate the effect. For a simple example, return to our scenario of a boy’s arm and hand movements that involved a glass of water. To interpret these events as purposeful behavior, we must say that the boy has some theory or expectation about the result of pouring water down his throat.

        That sure seems like the basis of prediction to me.

        • Bob Murphy says:

          I’m not wading into the details of your guys’ debate, but Tel, I don’t think praxeology makes falsifiable predictions, even though praxeology only makes sense if there are individuals making falsifiable predictions. (That’s what my quote–which I think you have a typo in (“individual’s can be”)–is getting at.)

          By the same token, praxeology per se doesn’t employ subjective value judgments, but it only makes sense if there are individuals with subjective value judgments.

          • Toby says:

            It depends I suppose on what you mean by whether it is praxeology or something else that is used to make these predictions.

            If you take the auxiliary assumptions that your logic is sound and that the conditions you’ve assumed are actually present and other conditions are absent, then you can make a prediction. If the prediction fails though, then you would have falsified the auxiliary assumptions.

            I think that this is what you mean by that praxeology does not make falsifiable predictions?

          • Tel says:

            Yeah, sorry I typed that quote wrong, a word is missing: “… individual’s behavior can be the trigger … “

            Anyway, you seem to understand what I was getting at.

            Mises made it clear that studying praxeology (or economics perhaps) is more than just an academic pastime. At the end of the book words like “civic duty” and “personal responsibility” come up, and there’s a number of direct messages for policy makers as well. I agree with him.

            The inescapable implication here is that praxeology provides a tool which helps us achieve some purpose, or at least Mises believed it, and I would guess all the people who have studied it ever since probably believed this was useful for something. Otherwise why do it?

            I’m not talking about a tool like a hammer which is a material thing that allows us to take action in a more powerful way than what bare hands would achieve. The hammer magnifies the action itself, but contributes nothing in terms of improving the decision making to guide the action.

            However, the purpose of studying any type of science, technology, craft, or praxeology is to know the best time and place to pick up that hammer, and have a better understanding of the consequences of our actions when we do. In other words, a tool to give us a window into the future, improving the quality of predictions we can make.

            Now the issue of “falsifiable” predictions is not really important when taking action. If the individual believes that an action leads to some desirable result, that’s good to go. However, if the economist wants to push forward a policy recommendation (i.e. an action) it would be more convincing if some sort of scientific test could back that up — both in terms of experimental evidence that this policy is believable, and also to propose an outcomes test afterwards to decide whether that policy was a success or failure. The economist is not merely taking action from an individual perspective, but also needs to convince a significant number of other individuals to go along with this action. This is a challenge.

            I agree that economics in general (not just Austrian economics, but all economics) has desperately struggled with this. There’s good reasons why empirical methodology taken from Physics and Chemistry is difficult is apply in the economic context. But that doesn’t invalidate the who concept of making a prediction, it means you end up using different tools for the purpose. Even a bad prediction is still something.

            Consider a very clunky analogy: the man who walks everywhere declares that a boat is not a form of transport. He argues that in a boat you cannot get a firm footing with good traction to the ground, which is essential. If you don’t believe ths, try wearing slippery leather shoes when the ground is a frozen sheet of ice… you keep falling down, can’t get traction so travel becomes impossible. Put on some spiked boots and now you can walk on the ice, thus we conclude that transport requires traction to the ground.

            What’s more, with good footing you can dance, jog, change direction quickly, duck to one side. The boat cannot do any of these things so it cannot be useful as transport.

            However the sailor declares that the boat is merely a different form of transport, with its own advantages and disadvantages. The purpose is the same, but achieved via alternative methods. Sure, the boat cannot stop and turn on a dime, but with a good wind it can travel for days and not get tired. What’s more, it is very difficult to walk on water… so if you want to cross the sea you are just going to have to abandon the idea of keeping your feet on the ground.

  3. Chris says:


    I think Rothbard had definite contributions in both economic history as well as in expanding the libertarian movement (although I disagree with many of his ideas). But what would you say are his main contributions to pure economic theory? I read most of Man, Economy, and the State a few years ago and I don’t remember that much of it, but it seemed at the time to me to be a worse version of Human Action, which I continue to go back to and find interesting subtle points.

    Could you give me a few points where Rothbard made significant improvements over what had already been said by Mises or Hayek?

      • Chris says:

        Thanks Dan, I assumed something like this existed but was too lazy to go find it.

        So Bob points to monopolies and cartels as a contribution of Rothbard. But how does Rothbard’s analysis differ from Hayek’s in, for example, “The Meaning of Competition.” I don’t think any of the three (Mises,Hayek, Rothbard) really buy the idea of “perfect competition” as a standard neoclassical exposition would define it. Again, maybe Rothbard clarified this idea, but I’m not sure how large of an original contribution he made. Obviously Bob knows a lot more about this than I do, so if he says it’s a big competition I believe him. But one of the things I like most about Hayek is his discussion of competition and I don’t see how Rothbard really extends that analysis.

        Also the debunking Keynesian part is funny, but I wouldn’t call it a real contribution. And if those are the best two he can come up with I’m not sure that does anything to convince me.

    • Bob Roddis says:

      Whether we consider the Action Axiom “a priori” or “empirical” depends on our ultimate philosophical position. Professor Mises, in the neoKantian tradition, considers this axiom a law of thought and therefore a categorical truth a priori to all experience. My own epistemological position rests on Aristotle and St. Thomas rather than Kant, and hence I would interpret the proposition differently. I would consider the axiom a law of reality rather than a law of thought, and hence “empirical” rather than “a priori.” But it should be obvious that this type of “empiricism” is so out of step with modern empiricism that I may just as well continue to call it a priori for present purposes. For (1) it is a law of reality that is not conceivably falsifiable, and yet is empirically meaningful and true; (2) it rests on universal inner experience, and not simply on external experience, that is, its evidence is reflective rather than physical; and (3) it is clearly a priori to complex historical events. @ p. 6

      In Defense of “Extreme Apriorism” By Murray N. Rothbard *


      99 and 44/100% pure.

  4. Silas Barta says:

    On the feeding-the-trolls link:

    >>There are definitely pro-immigrant groups you could volunteer for, but there are few open borders groups that take volunteers.

    >Not sure I follow. Surely no open borders group can exclude people from entering?

    Ouch! Good one, Bob!

    Interestingly enough, I had a “shower though” about the open borders fanatics: there is a significant overlap between them and LessWrongers, who think one of the most important future problems is the release of a malevolent superintelligence that doesn’t share our values. Think about that:

    – “How dare you prevent the arrival of human-intelligence beings on our shores, merely because they might not share our values!”

    – “The absolute worst thing that can happen is to allow a superintelligent being to live among us while not sharing our vaues.”

    I guess only *some* antagonistic immigration is problematic?

  5. Bob Roddis says:

    Just like here, I’m always able to make new friends in the comments to Tom Woods’ podcasts.


  6. Bob Roddis says:

    I had been reading Scott Sumner’s “The myth at the heart of internet Austrianism” forgetting that Bob Murphy had critiqued it in 2011 using data.


    I was trying to come up with a non-data based explanation for the price collapse which started in 1929. This is it in the form of questions for monetarists and Keynesians:

    Why would sustainable prices collapse? Isn’t the collapse of prices which started in 1929 evidence that they were unsustainable and thus induced by prior artificial credit creation? Further, isn’t that analysis supported by monetarist and Keynesian insistence that the prices could have re-inflated with “looser” credit creation?

    I guess that asking these questions makes me a Rothbard cultist.

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