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They're always predicting deep recessions in the near future.

The Austrian theory of the business cycle predicts that we'll eventually have a matching bust for every artificially created boom. So, if we are in the middle of a large, artificial boom created by the government, then there will either be 1) a deep recession in the "near future", or 2) an even bigger bubble in the near future, which will eventually result in an even bigger bust. The Austrians are always predicting that we'll go down one of those paths, and they're always right.

Right now, I see them predicting hyperinflation; we'll see if that actually happens or not.

Austrians say that if the government continues to print money, we'll either get stagflation or hyperinflation, depending on how fast the government prints money. Like you said, we'll see.

These are not unimportant questions...

I think they are unimportant. The bottom line is that the Austrian theories apply to actors; persons; beings who act purposefully. If you want to argue that the Austrian theory does not address comatose people, I'm fine with that. As far as corporations, Rothbard constantly points out that groups (e.g. corporations, governments, countries) are not persons. That's one of the major problems with socialism: It talks about "the people" wanting this or that. But groups are not persons, and talking about groups as if they are persons leads to many problems.

the Pythagorean theorem can be expressed in a purely symbolic manner...

That does not make it any more precise than Austrian theory. You should really read this paper. If that paper does not convince you that Austrian theory is precise, then there is no way that I can. I'm dead serious about this. I would love to include some of its quotes in this post, but they're too long.

if you wanted to send something into space, would you ask a philosopher, or would you ask a physicist?

If my question does not involve actors, then I would ask the physicist. But if the physicist tried to create a mathematical equation to model human behavior, and the philosopher points out that even though the equation is mathematically correct, it does not map onto human action that way the physicist believes it does, I would go with the philosopher. The physicist may continue to build upon his equation, but all of his conclusions will be wrong, because his foundation is flawed.

You mean they study Austrian economics, a system decidedly out of the economics mainstream and without much intellectual merit.

The vast majority of Austrian economists predicted that we would have a very deep recession, way back when most mainstream economists were still talking about the possibility of a "slowdown" in the housing sector, which might spread to the rest of the economy. You can spew as much bullshit as you want, but you can't change that fact. The mainstream was wrong, and the Austrians were right.

Austrian economics rejects most quantitative assessment of principles...

You can't disprove a priori knowledge with "quantitative assessment". In other words, no amount of empirical evidence will ever disprove the Pythagorean theorem.

Its axioms are ambiguous, its terms ill-defined.

Are you sure you're not talking about Keynesian economics? You might want to check out this chapter, where Rothbard simply murders the "equation of exchange".

If you don't believe me, show one of their foundational books to a mathematician and watch as you are laughed out of the room.

Really? I'd be much more impressed if they were able to point out a flaw in the author's reasoning. But, laughing is much easier than engaing in critical thinking, isn't it?

Firstly, my ISP rebuttal is a bit higher in the thread. Rather than retype it here, comment prior to yours for reference.

For Microsoft. Of course they try, and largely succeed in precisely what you accuse them of. But once their prices exceed their value, they too will cease selling as many products and make themselves vulnerable to competitors that provide greater value for price. There are computer makers that sell computers only loaded with Linux; yes very small right now, but do you think people would endlessly look at those alternatives and say, 'looks great, but I have to buy a Microsoft loaded PC' if Microsoft wasn't adding value in a way that the marketplace desired?

As for your Microeconomics 101 text book, whether just a glib remark or not,... I wouldn't take it on faith. There are many economists micro and macro that are a bit too academic for their own good. Many of them are now in Government. I prefer the Austrian school of economics as they tend to be more right in practice about the workings of the economy (http://www.mises.org and http://mises.org/story/621 more specifically for a discussion on monopoly).

There is a very good book by two economists: Michele Boldrin and David K. Levine called "Against Intellectual Monopoly" in which they cite example after example of real empirical evidence that dispels the claims of the value of IP. The claim that IP is necessary to spur innovation, and protect profits to repay all of the research required is not supported by actual evidence. They put their money where their mouth is in that the book is in the creative commons and can be downloaded as a free pdf at http://mises.org/books/against.pdf

You can read the founding principles of the Federal Reserve here. I believe most of those are taken verbatim from the charter by Congress.

The Fed has been lowering interest rates since September of 2007. I'm not sure what small business you're concerned about having gone under recently, but whatever it was, it wasn't due to the Fed raising interest rates.

I can't really speak to who predicted the housing market bubble and who didn't. It's kind of beside the point. But Peter Schiff is one Austrian who definitely did.

Regarding Greenspan, you may want to read this article from January of 2001, outlining what an Austrian-school-inspired Fed chairman might do in the coming years, and contrast it with the chart I posted earlier of what Greenspan actually did instead.

I suggest a healthy step back and a re-examination of the world around you.

I can assure you, I am constantly examining the world around me in great detail.

Many of the "problems" of so-called market failures were actually caused by governments in the first place. Utilities and infrastructure are prime examples. There were hundreds of competitors in these fields before the government came in and forced everyone to consolidate. In fact, I can't really think of any current, major monopolist that wasn't initially created from some kind of special government protection.

Also, it is pretty obvious that governments have not solved externatilites or free rider "problems". Governments create a whole separate class of free riders that are dependent on hand-outs.

You should take a look at this article, which really helped me understand the myths involved in natural monopolies:

http://mises.org/journals/rae/pdf/RAE9_2_3.pdf

A couple of things:

1. I'm pretty sure the C in OPEC stands for countries, so OPEC is nothing but government price controls.

2. Cut in production does not necessarily mean shortages. It only means shortages when there are price controls in place by the government and prices are not allowed to adjust to equilibrium with the new level of supply and demand. But that's ok. I'm sure it had absolutely NOTHING to do with the draconian price controls implemented by the US government in the early 1970s.

http://www.wtrg.com/prices.htm

http://mises.org/story/3025

http://mises.org/story/3107

I'm sure National Socialists like yourself who want to exert dictatorial control over other peoples lives don't like to hear this, but there are no shortages in free markets, there are only accurate prices.

You know what, you're right! That must be why my Water Department is completely private, why the Police Department is completely private, why the United States Military is completely priv...oh wait.

SO! Now that we've dispelled *that* myth, I guess we can determine (by your own writings) that *I'm* a "National Socialist" because I simply want the United States to be energy independent (I could care less about the environment, BTW) and *You* are a patriot because you think the chips "should fall where they lay"?

Fuck everyone and everyone should be out for themselves, is that your "plan"?

A couple of things:

1. I'm pretty sure the C in OPEC stands for countries, so OPEC is nothing but government price controls.

2. Cut in production does not necessarily mean shortages. It only means shortages when there are price controls in place by the government and prices are not allowed to adjust to equilibrium with the new level of supply and demand. But that's ok. I'm sure it had absolutely NOTHING to do with the draconian price controls implemented by the US government in the early 1970s.

http://www.wtrg.com/prices.htm

http://mises.org/story/3025

http://mises.org/story/3107

I'm sure National Socialists like yourself who want to exert dictatorial control over other peoples lives don't like to hear this, but there are no shortages in free markets, there are only accurate prices.

You know what, you're right! That must be why my Water Department is completely private, why the Police Department is completely private, why the United States Military is completely priv...oh wait.

SO! Now that we've dispelled *that* myth, I guess we can determine (by your own writings) that *I'm* a "National Socialist" because I simply want the United States to be energy independent (I could care less about the environment, BTW) and *You* are a patriot because you think the chips "should fall where they lay"?

Fuck everyone and everyone should be out for themselves, is that your "plan"?

I thought that Keynes was all about macro stuff

I actually just started reading Human Action today, and really enjoying it. In the scholar edition (that is the edition linked), the introduction covers a lot of the personal relationship and rivalry. I always had that impression, and had been told, that Microeconomics was about small local economies, while macroeconomics looks at the economy from the big picture / national level. But the impression I was getting from the intro of that book was that to a certain extent the interpretation of what "micro" and "macro" meant was intentional by proponents of Keynes. I think a more appropriate (though maybe just as bias) meaning of "micro" (which Mesis agreed with) was that he advocated for a bottom-up approach, and that Keynes "Macro" philosophy was a top-down approach. I could only hope to ever explain the fundamental differences between bottom-up and top-down as well as this guy. It is a great read, and MUCH shorter than the link above that covers a mans life work; Feynman on the Challenger disaster. Looking at the big picture is useful, but trying to control it directly will not cause the changes intended because too many things can be tied to that element that were not realized. Looking at a problem from the bottom-up, not to advocate for micro-management so much as delicate management, you get a much better perspective on all variables, and any policies taken from such an approach will be more precise, and better learned from to build upon appropriately. Anyway, I'll not just keep going on with that, but see how that definition of "microeconomics" is really different than to mean small and only appropriate when involving a few number of people?

Oh, and as long as were on the topic, I am actually a big fan of The Fair Tax. I think it is much more than "a national sales tax" and is worth looking at in fine detail. I think our tax code has

A couple of things:

1. I'm pretty sure the C in OPEC stands for countries, so OPEC is nothing but government price controls.

2. Cut in production does not necessarily mean shortages. It only means shortages when there are price controls in place by the government and prices are not allowed to adjust to equilibrium with the new level of supply and demand. But that's ok. I'm sure it had absolutely NOTHING to do with the draconian price controls implemented by the US government in the early 1970s.

http://www.wtrg.com/prices.htm
http://mises.org/story/3025
http://mises.org/story/3107

I'm sure National Socialists like yourself who want to exert dictatorial control over other peoples lives don't like to hear this, but there are no shortages in free markets, there are only accurate prices.

You are right about one thing though: price controls, like every other government action, are acts of aggressive violence and do constitute and act of war.

A couple of things:

1. I'm pretty sure the C in OPEC stands for countries, so OPEC is nothing but government price controls.

2. Cut in production does not necessarily mean shortages. It only means shortages when there are price controls in place by the government and prices are not allowed to adjust to equilibrium with the new level of supply and demand. But that's ok. I'm sure it had absolutely NOTHING to do with the draconian price controls implemented by the US government in the early 1970s.

http://www.wtrg.com/prices.htm
http://mises.org/story/3025
http://mises.org/story/3107

I'm sure National Socialists like yourself who want to exert dictatorial control over other peoples lives don't like to hear this, but there are no shortages in free markets, there are only accurate prices.

You are right about one thing though: price controls, like every other government action, are acts of aggressive violence and do constitute and act of war.

http://mises.org/books/socialism/contents.aspx

It's already tried to repeal the laws of economics; hard to see how this would be any different.

Economics is a social science and should be treated as such.

Maybe mainstream economic thinking is not good science in the sense that it wasn't tested enough and economists are more confident in their conclusions than they actually should be.

No, the problem with mainstream economic thinking is that they want to treat it like a natural science, e.g. where experiments are run and conclusions derived, when it should be treated as a deductive, logical social science. They want to come up with relationships by positivist experimentation, which is ridiculous in a system where there are trillions of inputs and trillions of outputs.

See Ludwig von Mises, Epistemlogical Problems of Economics, if you want to read further.

> There are far more factors involved in payment than whether I enjoy
> my job or not

Of course it's not the only factor!

> Your argument is based on the idea that people are paid what they
> think they are worth, not what the company which employs them thinks
> they are worth

No, my argument is not based on that. It's much more involved than that. HOWEVER, the bottom line is that it cannot be true that you would rather work than do things like golf, go on vacation, etc.

> Consider the following

Your example supports my argument.

> Correct me if I'm wrong, but the core of your argument appears to be;
> "if I am enjoying myself, I must pay" and "if I am not enjoying myself,
> I must be paid".

Yes, you are wrong. That is not my argument. My argument is that I call bullshit on people who say that they'd rather be working than not working. The things you allude to above is just me fumbling around trying to explain why it's bullshit to you, since you don't have a very good grasp on economics. Fundamentally, money is the encapsulation of enjoyment, because it is the means by which you purchase things that you enjoy (including supporting your family, your puppy, paying your mortgage, etc.). You mix these with "survival", but in reality you do not need money to survive in these days. You can survive without money, utilizing government programs for free food, free medical, and free shelter, as well as numerous charity offerings. What you call "survival" is truly enjoyment, and the quantification of it is money. I know it's a nice colloquialism that money doesn't equal happiness, but these same people cannot say what money then is instead.

Instead of continuing to be a dick, I will point you to the following document. Parts III and IV are probably not of interest to you, but the first part (Intro and Part II) has a decent historical account of money and an explanation of what money really is, in a language people not trained in economics can understand. http://www.mises.org/books/whathasgovernmentdone.pdf

> If I only come to work because I enjoy my job, what is to stop me
> from randomly changing my mind?

That is a non-argument, because I can say the same thing about equitable pay. If you believe you are being paid fairly/well, what is to stop you from randomly changing your mind? I'm not sure what the meaning of "randomly changing my mind" is, even.

Not quite... "According to spokesmen of both NASA and the federal government, the price tag of the mission to Mars currently sits at approximately $11 billion over the course of the multi-stage implementation of the program. Unfortunately, flipping this extraordinary bill is only a small portion of the whole sum of costs imposed by the Mars Exploration Program." - http://www.mises.org/article.aspx?Id=1440

Rothbard is a whackaloon, and everyone knows it.

Goodness, what a detailed and unassailable critique of a great historian and economist's work. How can I possibly argue against such masterful rhetoric?

Oh, I remember now: I defy you to actually read what the man wrote, and refute it if you can. Go ahead, try to cite a factual error.

-jcr

If you are ever wrongly accused of plagiarism (or for that matter, copyright infringement),

Your plan won't help with trademark infringement. Here are two relevant stories from mises.org:

http://blog.mises.org/archives/009859.asp

http://blog.mises.org/archives/009864.asp

If you are ever wrongly accused of plagiarism (or for that matter, copyright infringement),

Your plan won't help with trademark infringement. Here are two relevant stories from mises.org:

http://blog.mises.org/archives/009859.asp

http://blog.mises.org/archives/009864.asp

The solution is simple. No Copyright. First to market with a salable work will "extract" all the "potential" you can get from any salable product. If nobody is buying, then there is no potential profit. Time to write another one that IS salable. Second, most publishers purchase the copyright as a condition of publication. If the work fails to sell, the publisher can limit the printing to none if they choose. The author, is then left holding a contract and no book, with no recourse to find another publisher. This is a common practice among publishers. With NO COPYRIGHT, this problem never occurs. If another publisher can print work from that author too, and does, then the author can work with them next time, giving them "first to market" exclusivity. Keep in mind that the law protects only the producer of the product, the book, the music, the movie etc. Not the author, unless the author is self publishing. http://blog.mises.org/archives/009681.asp

You mean again? http://mises.org/story/3056

free-market evangelists never mention anything about it

Yep, they surely don't: http://mises.org/story/2190 http://mises.org/story/2259 http://www.cato.org/pub_display.php?pub_id=1020

free-market evangelists never mention anything about it

Yep, they surely don't: http://mises.org/story/2190 http://mises.org/story/2259 http://www.cato.org/pub_display.php?pub_id=1020

I'd take a look at this...
http://mises.org/story/3416

OK, well let's see that argument, then. It's not much good saying that one "could" argue something, without seeing the specifics.

Recommended reading: http://mises.org/articles.aspx

I think GP should have said the natural consequence of capitalism, is that it easily lends itself to abuse in the end.

As does communism, socialism, religion(ism), and other "isms".

Once a few or a single company owns a market, there are no market forces keeping them in check. The free market doesn't account for that scenario, despite desperately repeated talking points.

But one or a few companies more than likely wouldn't "own" a market in a free market system. I wouldn't say all, because there may be cases that are exceptions but I can't think of any right though you might, but I bet most economic sectors where one or a few companies dominate it it's because government allows it. Like cable and phone service. Governments, in the US, gave one provider a monopoly in the use of rights of way for each service. Radio is the same but different. Originally in the US radio frequencies were homesteaded.

The first person to broadcast in an area on a specific frequency had the right to use that frequency. If someone else in the same area started broadcasting on the same frequency or interferred with the broadcasting courts were ruling that the first person to broadcast had the right to that frequency. This all changed when the big radio businesses pressured congress to create the Federal Radio Commission and to license the airwaves. The excuse being that the airwaves were a scarce resource. But the real reason was that big broadcasters didn't want competition.

So yeah, capitalism doesn't own corruption, but without some kind of system of fair rules, coupled with enforcement, it does lend itself to corruption quite easily.

Now this is where I disagree with some Libertarians, capital and small "l", I do support some regulating but only after the market has not been able to work out the problems. Such as a big radio broadcasting business entering into a market some one else is already using. Even that can be dealt with by the courts as it was in the beginning. Another area I disagree with some is in the ownership of infrastructure such as cable and phone. I believe it would be better if the entity that owns the infrastructure didn't sale the services directly to consumers so that they wouldn't have a monopoly on it. Instead I'd have them allow open access so others could offer said services. An example of this is northeastern Utah where a group of communities got together to build a broadband utopia. Private businesses can use the infrastructure to provide broadband, cable TV, and or phone access to consumers. This mixes a free market with socialism, if the government owns the system. However as was done with the Rural Electrification Act to electrify rural communities during the mid to later 1930s. The act paid for the erection of wind generators, the Jacobs wind turbines were considered the best and even today people seek out Jacobs to use themselves. When erected many of them were owned by coops where those who used the electricity and wanted to be a member of the coop could be.

I'll also note that capitalism does some things quite a bit more efficiently (and therefor maybe better) than the other economic systems - but each economic system, like each political system, has it's benefits, and I don't see why we constantly feel the need to apply one system to everything in an ideologically pure way.

Though I consider myself pro free market capitalism and a libertarian, as I state above I agree with this. Though I want liber

Mister, please read http://mises.org/books/fed.pdf Murray Rothbard's THe case against the Fed and then come back and try to make a reasonable argument on this forum. You're embarassing yourself by saying that free markets do not work. The United States has not had free markets since 1913 when the Federal Reserve was created. THe Federal reserve has the power to turn us into dirt-poor overnight with the push of a button. This is not free markets - this is managed markets by the government. THe reason we are in this mess right now is due to easy credit by the Federal Reserve - they lowered the interest rate to unreasonably low levels and this triggered the home-buying mania that then jacked up prices due to high demand and easy money. This is the main reason for the housing bubble. All I am saying here has nothing to do with stupid ideology - it has all to do with simple common sense and understanding of how the current economy works. Do you know what would happen if we had free markets? AIG, Citi, Wachovia, and the other rascals would be out of business immediately. THere would be no government bailouts, nada, nilch! Income taxes would be really low (like 2-3%), there would be no Federal REserve and money would be backed by a commodity. THere would be no fractional reserve banking which would prevent bubbles, speculations and boom and bust cycles. You probably have no idea what causes boom and bust cycles. YOu probably have no idea what inflation is. You probably have no idea that money to trade is like scales to ice cream stand. YOu probably have no idea that inflation is hidden tax on savers - the very same people who generate capital in order to invest in projects and grow economies. You probably have no idea what is the difference between capital and credit. You probably have no idea about how many things are wrong with the US and world economies. You should read up on this stuff to help you understand. And please do not tell us that the government can spend my money more efficiently than I would spend my money - this is just utter nonsense.

... pissed off the existing music-teaching cartel

This was an interesting read. The writer belongs to the Ludwig von Mises Institute, which "advance[s] the scholarship of liberty in the tradition of the Austrian School". The writer is primarily concerned with liberty.

As a professional musician, I found one aspect of this humorous. The writer refers to "a tiny and ever-arrogant cartel of masters," who "...you know that they wanted to limit their numbers," and "the elite musicians resisted his attempt to democratize the knowledge and conserve time." This shady group of people are what we call "monks". I don't think a single monk would have considered himself an "elite musician" who wanted to "limit the numbers" of other monks, and the writer provides no original sources to back this claim.

The monks chanted not to become elite musicians, but to make their prayers more accessible and easier to memorize. I can just imagine one thousand years ago a monk strolling up to some local troubadour saying, "I'm an elite musician." The troubadour would laugh in his face, tune up his lute, then improvise a song in rondo form about what kind of goofs live in a monastery. A crowd would gather, and some people would throw him coins for his excellent entertainment.

The writers larger point about how musical notation made music more egalitarian is partly right. However, people would still need to learn to read notation, and at the time, that meant hiring a music teacher (unless you were a monk). So what you have here is the same problem you have today. You can learn music two ways: by ear, or by notation. Now which way do you think is the "elite" way, and which is the egalitarian way? It's the opposite of what the writer argues! Professional symphony orchestra musicians almost exclusively read notation. Modern musicians, like rock and hip-hop, almost exclusively play by ear.

I thought it was an interesting read, but:

Big businessmen, not politicians, controlled the new industrialized America of the Gilded Age. Whereas past generations sent their best men into public service, in the last decades of the 1800s, young men were enticed by the private sector, where with a little persistence, hard work, and ruthlessness, one could reap enormous profits. These so-called "captains of industry" were not regulated by the government and did whatever they could to make as much money as possible. These industrialists' business practices were sometimes so unscrupulous that they were given the name "robber barons."

Doesn't it sound like the writer is a little biased against 'petty private sector wealth seeking' as opposed to 'noble public sector endeavors'? It makes it kind of hard for me to take it seriously.

If you're interested, here's a link to a small essay by D.T. Armentano on his view of the history of antitrust law and the 'robber barons' in America.

Arguably, income tax is preferable over spending tax, because if you reward saving too much you end up with a deflationary death spiral which is what caused the great depression and would still punish people who saved their money because they'd probably be unemployed and have to spend those savings.

http://mises.org/story/1583

IP is actually a matter of considerable debate among libertarians -- at least the ones who write for the academic journals. Lately the consensus has been toward a narrower interpretation of intellectual property.

http://blog.mises.org/archives/001771.asp

Property/Rights-based Arguments

        * Against Intellectual Property, Spring 2001, Vol. 15, no. 2 Journal of Libertarian Studies, Stephan Kinsella
        * In Defense of Napster and Against the Second Homesteading Rule, September 4, 2000, LewRockwell.com, Stephan Kinsella (summary version of some of the arguments presented in "Against Intellectual Property")
        * Murray N. Rothbard, Man, Economy, and State and Power and Market, Scholars Edition, liv, 745-54, 1133-38, 1181-86
        * Murray N. Rothbard, The Ethics of Liberty, pp. 123ï½24.

Utilitarian Considerations

        * Patents and Copyrights: Do the Benefits Exceed the Costs?, Fall 2001, Vol. 15 Num. 4 Journal of Libertarian Studies, Julio H. Cole
        * On the Abuse of Patents as Economic Indicators, Winter 1998, Quarterly Journal of Austrian Economics, Pierre Desrochers
        * Ludwig von Mises, Human Action 3rd rev. ed. Chicago: Henry Regnery (1966), chap. 23, section 6, pp. 661ï½62; see also pp. 128, 364
        * George Reisman, Capitalism, pp. 388-89 & 417-20; also 40, 96, 187, 216, 233.

What? In politics maybe, but not the libertarians I know.
Private property is the solution to limited resources, and modern intellectual property is not limited in any sense.

There had been no society in the history of the world that worked as you describe.

Wrong. Take a look at medieval Iceland. While the rest of Europe and Scandinavia was suffering under authoritarianism, Icelanders, with fewer natural resources, achieved a higher standard living and a more peaceful society.

in general, it's the countries with the higher welfare spending (and taxes, of course) that tend to have least poverty, best healthcare and education, and so on (Scandinavia, for example).

Wrong again. Take a look at Sweden? If they left the European Union and joined the United States, they would be the poorest of our 51 states.

Capitalisim is great and all but how is it possible without law, and how is law effective without enforcement?

I will not try to summarize the arguments here, but there is plenty of literature on the subject. In particular, check out some of Murray Rothbard's writings, such as Power and Market: Government and the Economy. This assumes you are at least open to the idea in the first place; if not, there's not much point in discussing it.

And please let's not talk about everyone bartering for horses out of the goodness of their hearts, that's just as fantasmagorical as the socilist's sharing and caring paradise.

Can we please leave behind the straw men?

So you are saying that people don't vote for their percieved self-intrest?

They have no incentive to invest the time and effort required to make an informed choice, because an individual vote accomplishes absolutely nothing unless the margin of the election would have been no greater than one vote. You've probably got better odds of winning the lottery, then using the money to fund your favored politician's campaign.

Thus it is completely rational for self-interested voters to behave the way they do; it's a form of the free rider problem. That's why I said democracy fights human nature: it only works if you assume people don't act in a self-interested way.

I find the term 'robber baron' quite amusing. Did they really put on masks and hold people up on train tracks? ;-)

Seriously now, these companies weren't busted because they were 'monopolies'. In fact there was more competition then then there is today. They were simply singled out because they big, successful and efficient.

This is a small excerpt from D.T. Armentano, the author of the book "Antitrust and monopoly". It's all a worthy read, but I took just a small nip that pertains especially to the Standard Oil case.

One of the most famous (and misunderstood) antitrust cases in history is US v. Standard Oil of New Jersey (1911).

The popular explanation of this case is that Standard Oil monopolized the oil industry, destroyed rivals through the use of predatory price-cutting, raised prices to consumers, and was punished by the Supreme Court for these proven transgressions. Nice story but totally false.

First, Standard never even monopolized petroleum refining, let alone the entire oil industry (production, transportation, refining, distribution) which would have been an impossibility. Even in domestic refining, Standard's share of the market declined for decades prior to the antitrust case (64% in 1907) and there were at least 137 competitors (firms like Shell, Gulf, Texaco) in oil refining in 1911. "A free-market 'monopoly' supplier is theoretically possible but not necessarily harmful and would not rationalize any antitrust regulation."

Second, although predatory practices were alleged by the government at trial, Standard offered rebuttal on all counts. Neither the trial court nor the Supreme Court ever made any specific finding of guilt on the conflicting charges of predatory practices.

Third, petroleum market outputs increased and prices declined for decades during the alleged period of "monopolization" by Standard Oil. For example, prices for kerosene (the industry's major product) were 30 cents a gallon in 1869 and fell to about 6 cents a gallon at the time of the antitrust trial.

Finally, the Supreme Court broke up the Standard Oil holding company not because of any demonstrable harm to consumers (there was none) but because it discerned some vague "intent" to monopolize through Standard's many mergers, an "intent" that just as clearly never succeeded in producing any monopoly. Yet generations of economic and legal commentators have been misled about monopoly and the alleged efficacy of antitrust policy because of the "facts everybody knows" concerning the Standard Oil antitrust case.

So I suppose all inventions and creative works before the patent system was implemented were all freak accidents in your view?

It is not because of the patent system that people use their heads. They use their heads to gain a competitive advantage, which they seek whether or not they are granted a monopoly.

If someone has a patent on the '1st method' you CAN'T improve on it, unless you want the original patent holder to own your improvement too. And since the owner of a patent enjoys a monopoly he has no incentive to improve on it so a patent is effectively a 'time out' on technological development as long as it is valid.

This excerpt from the 1st Chapter of Mr. Boldrin's book is a very compelling example of how patents stifle innovation instead of promoting it.

-Cause stagnation via protectionist policies, then wait for other nations to pass us by on their way to a higher standard of livin and eocnomic vitality?

[Citation Needed]

Citations:

http://www.econlib.org/library/Enc/Protectionism.html
For you Austrian school folks (God, I can't believe I'm linking to Mises to support my position): http://mises.org/rothbard/protectionism.asp
For the interventionists, a counterpiece by Krugman, saying protectionism has a place... provided that other means fail: http://krugman.blogs.nytimes.com/2009/02/01/protectionism-and-stimulus-wonkish/
Another piece:http://www.morganstanley.com/views/gef/archive/2007/20070126-Fri.html

In the news, another danger of protectionism (as was seen in the great depression): http://www.canberratimes.com.au/news/world/world/general/wto-fears-protectionism-domino-effect/1449424.aspx

The risk is that we adopt protectionist policies, and other nations adopt them against us -- but not with eachother. Thus we get left behind in the expansionary economies the other nations will go through. This is the problem that Krugman misses... protectionism globally will reduce the impact of economic problems in each country on the whole, only if the protectionism is directed to all trading partners. If the EU, for example, raises protective barriers agains the US, but not the rest of the world, we've got problems. Please note that this is in re: protective trade restrictions; subsidies (like the stimulus package) are another form of protectionism, that by nature are partner-agnostic, and I think this form of protectionism is what Krugman refers to.

However, we're discussing labor protectionism, which is a slightly different beast.

Oh yeah, let's have competing groups pirating the air waves, that will make everything better.

No, just go back to how the airwaves were homesteaded. Way back before the Federal Radio Commission, which was the predecessor to the FCC, was enacted the first person to use a certain frequency in a specific location was said to have homesteaded that frequency in that area. When someone came along and started using the same frequency someone else was already using courts held the right of the first person to use that frequency. It was only after big media companies or broadcasters started pushing for licensing when they became mandatory. These big companies did not like the competition so they made sure competition was reduced.

And that's a big problem with large government, it reduces competition.

Falcon

Yes, I agree it's hilariously ironic that Microsoft is advocating openness. However, as much as I dislike Microsoft, antitrust arguments are ridiculous to begin with - antitrust legislation is without a doubt one of the most counterproductive aspects of the US Legal Code: damaging to consumers, and only helpful to rent-seeking producers who would rather drag down their more efficient and productive rivals than innovate themselves. See the following work: http://mises.org/books/antitrust.pdf Or Chapter 10 of this masterpiece: http://mises.org/rothbard/mespm.PDF Or, hell, read Atlas Shrugged.

Yes, I agree it's hilariously ironic that Microsoft is advocating openness. However, as much as I dislike Microsoft, antitrust arguments are ridiculous to begin with - antitrust legislation is without a doubt one of the most counterproductive aspects of the US Legal Code: damaging to consumers, and only helpful to rent-seeking producers who would rather drag down their more efficient and productive rivals than innovate themselves. See the following work: http://mises.org/books/antitrust.pdf Or Chapter 10 of this masterpiece: http://mises.org/rothbard/mespm.PDF Or, hell, read Atlas Shrugged.

Milton Friedman argued that the legal framework is already in place to deal with companies polluting the environment. It all boils down to private property. Few people pollute their own land and few people care if someone pollutes his/her own land.

Well, then either Milton Friedman was hopelessly clueless, or you're oversimplifying his position. My money's on the latter.

The legal framework is most certainly *not* in place to deal with companies polluting the environment. Since about 1850, governments have voided common law remedies on the grounds that economic growth (in the sense they want) is more important than respecting property rights. No, don't take my word for it, just listen to a prominent ultra-libertarian on the issue.

Yes, the private property framework *would* address the issue, if we lived in such a world. But we don't. And as long as we don't, we shouldn't be surprised if people demand stupid subsidies that attempt to protect the environment, using the best economics and policies they're aware of. Let's change that.

New York is a welfare state.

It is real condition http://mises.org/story/2225

OUR system needs fuel in form of money. Anything that can be considered (at least to a tipping point) as a social negative will be taxed like crazy to keep the machine running. It is a process like perpetual motion. It will attrify and die eventually unless we come to our senses and correct the current system.

Tax revolt NOW!

We're trillions of dollars poorer because of an enormous swindle -- very successful for those who perpetrated it, and very very painful for everybody else.

You're right up to this point.

The swindle was only possible because of deregulation;

and this is where you go right off into the weeds again. Fiat money is the swindle, and it's only possible because the government forces us all to accept the loss of our purchasing power through inflation.

only the dumbest people, namely you

I've studied the matter, and you obviously haven't.

As for who's calling for deregulation, that's mostly coming from the people who were sounding the warning about this bubble for the last decade or so.

-jcr

You mentioned mortgage backed securities and their value. My question is: SHOULD they have any value left ? There are those who believe that the securities created the housing bubble to begin with. And it makes perfect sense because governments securing loans only exists to encourage sub-prime lending in the first place.

If banks are insolvent right now then it is because they made bad loans. And banks who make more bad loans than good SHOULD fail. I don't see how we ever got into this belief that capital is debt rather than savings. Economists throughout history have said that capital comes from savings. In this past century we started financing everything with debt.

My original point was that when a rich person (or any person, class is irrelevant at this point in the debate) puts their money into a savings account the bank uses part of it to make loans. OK, so banks are insolvent. They'll use the money to either pay off their debt or buy treasury bonds instead. If people (and banks) started saving their money and liquidating their debt, and government started cutting spending and liquidating it's debt, then the habits that got us into this mess in the first place will start to be undone. If government stops securing loans and printing money, and people put more into savings (instead of trying to finance all of their living through debt), then banks will be forced to make GOOD LOANS on people with good investment history and viable business plans, rather than lending to people who stand an excellent chance of defaulting.

Taxing everyone so that we can encourage banks that made bad loans to continue doing so and pump everyone's money into industries that the market is rejecting is only going to make things worse.

With regards to the Mises institute web-site, I encourage you to at least read about it and who Ludwig Von Mises was and what contributions he made to economics. I agree with your point about the silly pictures, but their contribution to the field of economics is immense and there is so much to learn from their publications.

That's a good point, if it's true.

Also, if the banks are buying treasury bonds then the government could use that money to pay off it's debts to the fed, which would deflate the pool of money thus causing prices to come down. Heck, they could liquidate any of the national debt with the money from those bonds which would help matters greatly.

You're pointing the finger at the banks, and they definitely do deserve a share of the blame, but so should the government and so should people who chose to take out loans that they couldn't pay back. This isn't a problem with capitalism, it's not a problem with the republicans or the democrats. It's a problem of government printing money, securing loans and giving hand-outs to special interest groups and those group taking whatever they can get and running with it.

I'm not saying that it's fair to the people who will loose. I'm not saying that it's entirely their fault and I'm not even saying that we (the public, not government specifically), should stand back and do nothing.

There is so much blame to go around. It's not fair to blame just the banks or Wall-Street, it's not fair to blame just the Republicans or the Democrats. This is a problem of gradual, systemic tampering with the way in which people trade and do business with one another. Consider that every thing the government does to assist one group must automatically be at the expense of another. In our mixed system of capitalism, welfare, corporatism and general interventionism we see government supported monopolies (via tariffs, licensure and regulations that make entry into industries very difficult), artificially reduced interest rates (through debt financing by the Fed), a deficit that's in the trillions (according to Ron Paul's book "The Revolution: A Manifesto" the US national debt is accruing 1.4 billion dollars per DAY in interest!) and a general tax on the entire public via the government's program of inflation.

So I'm not saying that we should do nothing to help the individuals who are on the loosing end. I'm just saying that governmental assistance is something to be extremely weary of. Because everything that I just listed is a result of "good intentions" on the part of government. Here's a radical theory: maybe if we cut the income tax and cut government spending to accommodate, and the government was honest with the public that the majority of their economic problems are a result of artificial market manipulation, the result of people being able to keep 100% of what they earn will stimulate them to being more charitable.

I encourage everyone to speak with their elders about what times were like when they were younger. The US has only had a fiat currency since 1913. It's only started to expand a world-wide military empire (that costs an estimated 1 trillion dollars per year that comes straight out of the productive areas of the economy) since the 1950's. HMO's and medicaire etc. are also relatively new and today we see virtually no pro-bono doctors or charity-run hospitals anymore. There used to be an abundance of them and no one was turned away because they couldn't afford treatment. Don't take my words for it, read some of Dr. Ron Paul's writing where he talks about what the health care system was like when he was a young practicing obstetrician.

So all I'm asking is for people to really examine ALL of the effects that government spending, in general, has on the entire economy as a whole instead of just looking at the short term effects. Nothing short of revolutionary reform would cut all governmental intervention but people, at the very least, need to be asking these questions and having these debates. Every time the economy goes sour, or there's some other catastrophic event (9/11, hurricanes Katrina and Gustov) people get a revived sense of dependence on government. It's a belief structure that's based around the idea that government, through means of forceful coercion, can take from the most productive areas of society and use those takings to somehow save the unproductive areas (sometimes their goals are successful but we never ask at what cost ? What new industry was indirectly destroyed because a dying industry was saved through governmental assistance and was the result for the better or for the worse ? And how would we know ?).

We should all feel compassionate and do what we can to help those who have found themselves on the loosing end. All I'm saying is that forceful coercion and governmental assistance never accomplishes the goal of economic prosperity. If we've seen prosperity in the past it's been in spite of intervention, not because of it.

On a lighter note, but one that helps illustrate the unintended side-effects of government hand-outs, the Ludwig Von Mises Institute web-site published an article recently titled Bailing Out the Red Light District that is worth a read. If for no other reason than to give you a good laugh.

I know this will probably never be read since I'm so late to the discussion, but oh well.

I work as an adult webmaster. The prevalence of piracy-paranoia is, I'm embarrassed to admit, almost greater in the adult industry than anywhere else.

Yes, I know, VHS and the Internet contributed tremendously to the success of the industry in the past 30 years. However, irrational fallacies still dominate. Just like they do in mainstream economics (I swear if I hear one more politician say they're going to create jobs ... but that's another topic). 5 - 10 years ago, TGP sites (thumbnail gallery posts) were the victim of outrage because they were "giving away" more and more content. Today it's you-tube inspired sites. The anger, irrationality and overall ignorance and blindness dominates the adult industry forums. People will not accept that free content and technological advances have contributed tremendously to the overall prosperity of the industry. Just like in mainstream politics, technology that has contributed to wealth gets condemned for putting people out of business. Any attempt to bring rational debate to the table is often met with the same type of emotion that dominates labour disputes.

Appropriately enough, today the Mises institute published an article on this very topic: Bailing Out the Red Light District.

worthwhile again. This means put in proper cover art, lyric sheets, etc rather than just a tiny scrap of paper.

I'd substitute vinyl records for CDs. Here'a an interesting article from "Wired", "Vinyl May Be Final Nail in CD's Coffin". Best Buy and Costco are starting to sell vinyl.

Sign some fucking new artists for god's sakes.

There are at least 4 shops within a couple of miles of me that sell vinyl. At one someone told me vinyl was popular with local artists.

There's also one thing I'd love to see happen from the government's end, which would be to reinstate the radio station ownership rules. It used to be, there were over 5000 different radio companies in the US. Now, 98% of the US market is owned by only 5 companies;

Which rules are you talking about? The rules I'll support are those used before the FRC, Federal Radio Commission, which was the predecessor to the FCC. Back then radiowaves were homesteaded. The first person to use a radio frequency was allowed to use that frequency in that area. If someone came along after and started broadcasting and it interfered with the first broadcaster the second station had to move to another frequency or stop broadcasting. And the courts were applying the common law theory of property rights to this. It was after Radio Act of 1927 which created the FRC that airwaves were licensed.

Falcon

Sorry, I must continue this off-topic thread. There have been panics throughout history, even when 10:1 was considered highly-leveraged. The Second Bank of the United States, eventually abolished by Jackson, fell victim in the Panic of 1819, with leverage of just 9:1. (See Rothbard's History of Money & Banking in the US)

Your point is well-taken, but given the history of panics under varied reserve requirements, there may be something to the concept that any fractional reserve banking at all is a problem.

Rothbard advocates Free Banking in The Mystery of Banking, a free-market system of banks with no regulation at all. In such a system, fractional reserve lending would actually be allowed, but it would not be legally protected by the state nor guaranteed by it. He predicts that under such a system, banks would tend towards full reserves because of the constant redemption of their notes by competing banks (among other reasons.)

Sorry, I must continue this off-topic thread. There have been panics throughout history, even when 10:1 was considered highly-leveraged. The Second Bank of the United States, eventually abolished by Jackson, fell victim in the Panic of 1819, with leverage of just 9:1. (See Rothbard's History of Money & Banking in the US)

Your point is well-taken, but given the history of panics under varied reserve requirements, there may be something to the concept that any fractional reserve banking at all is a problem.

Rothbard advocates Free Banking in The Mystery of Banking, a free-market system of banks with no regulation at all. In such a system, fractional reserve lending would actually be allowed, but it would not be legally protected by the state nor guaranteed by it. He predicts that under such a system, banks would tend towards full reserves because of the constant redemption of their notes by competing banks (among other reasons.)