Regulation may not produce things, but it helps prevent The People as you like to call them from getting Ripped Off, such as during the California electricity crisis.
Bad example. The Wikipedia article you linked to explains what happened:
The major flaw of the deregulation scheme was that it was an incomplete deregulation--that is, "middleman" utility distributors continued to be regulated and forced to charge fixed prices, and continued to have limited choice in terms of electricity providers. Other, less catastrophic energy deregulation schemes, such as Pennsylvania's, have generally deregulated utilities but kept the providers regulated, or deregulated both.
The California electricity crisis is an example of the chaos that partial deregulation creates. Total regulation may be better, but you still get the socialist calculation problem. In other words, without prices, bureaucrats will make arbitrary decisions that create an under-supply or an over-supply of the goods they control. And, of course, the "problem" with the free market is that consumers have to pay the price set by supply and demand (oh, the horror!).
In summary, partial deregulation < total regulation < free market.
Agreed. Arizona is just looking out for their own good. The amount of drugs and violence brought over by illegals is astounding. It has nothing to do with race/ethnicity/etc, it's just defending communities.
Why is it unacceptable to discriminate on the basis of race and gender, but it's perfectly fine to make the exact same arguments on the basis of national origin? If you said "The amount of drugs and violence spread by black people is astounding, so defending our white communities is just common sense", you'd be making a racist statement. But so long as we're discriminating on the basis of geography and not skin color, it's all supposed to be fine? I don't get it.
She basically took our investment, used us to build up a caseload and a revenue stream, and then decided to call it "her" business.
Everyone uses each other in capitalism. You used her to run a second office. She used you to build up a list of contacts. The relationship was a mutually beneficial one.
People can not be owned, and therefore can't be stolen. Thus, she did not "steal" your therapists or your patients. They just chose her over you. That's competition. The fact that she won the competition means that her sense of self-worth was not "inflated"; rather, her sense of self-worth was accurate and your sense of her worth was deflated.
...a small therapy business that we took out loans for every penny we're worth to finance, advertise, brand, and build from the ground up.
It seems that director found a cheaper way to advertise: Build up your reputation and business relationships by working for an established business.
By the way, when you hired her, you could have brought her on as a partner and offered her some share of profits and costs, to make it less likely that she would become a competitor. But you didn't do that. Now, maybe there are some more facts about this situation that I don't know, but based on what you have told us, it sounds like she didn't do anything wrong.
I completely understand, because I felt the same way when I graduated college with a computer science degree. I had a part-time programming job during college, but that wasn't enough. No one was willing to take a chance on me.
So, what did I do? I lowered my expectations and started applying to any job that was remotely technical. I managed to land a technical support job at a local university. I thought to myself, "This is a dead-end job. I'm making $13 an hour, which isn't too bad for the work I'm doing. But I'm not using any of my programming skills. I'm just talking on the phone."
Three months later, however, I was able to land a job as an application engineer: A job where I would be talking to customers on the phone about problems that required C/C++ knowledge. So, the job that I thought was "dead-end" was actually crucial for my career path, because it gave me the technical support experience I needed to land the application engineering job. And after working as an application engineer for a couple of years, I was able to convince the managers that I had what it took to be a software engineer, which was the job I wanted in the first place.
So, what I'm saying is, start applying to any job that involves any kind of technical work, even if you won't be using your degree, because you never know what paths will open up.
So if the government is a bunch of incompetent, inefficient morons who can never be as good as private industry, then why the hell do you care if they give people the OPTION of choosing a government plan?
I can answer that. It's because the ONLY reason to offer a government option instead of a private option is so that the government option will get some unfair advantage. Maybe the plan will receive tax money. Maybe the plan will receive a special tax break. It may be subtle, but there will be some unfair advantage. If there wasn't one, then the public option supporters would just start their own, private co-op. There would be no need to go through the government, and no need to make compromises with republicans or conservative democrats.
The government does not have some sort of magic power that will make the production process more efficient. Anything the government does through force could instead be done by private parties, so long as all of the parties involved will benefit from cooperation. If someone tells you that the government can make something more efficient, then keep a sharp eye on your wallet, because it's about to be picked.
Suppose you're a juror in a case where there is a ton of evidence against the defendant. But he has a defense: He says that it was his "invisible friend" that actually committed the crime and left all that damning evidence.
"Can you prove that my invisible friend doesn't exist?" he asks. "If not, then you can't convict me!"
Would you be able to say to yourself, "I know that his invisible friend does not exist"? If you would say that, then why can't I use similar logic to say "I know that God does not exist"?
If you wouldn't say "I know that his invisible friend does not exist", then it seems like you could never use the word "know". After all, if it's possible that invisible magical beings really do exist, then it must be equally possible that everything that appears to exist is simply an illusion (e.g. you're living in the matrix)! If that's the case, then you can't "know" anything and the word becomes meaningless.
In fact, we need to raise the average quality of physician. But how? I know! How about, we only hand out one medical license every four years to the brightest medical student in the world? That would cause the average quality of physicians to sky rocket! Sure, a bunch of people would die from lack of health care, but we mustn't let facts get in the way of good central planning.
I suppose some people would say that we need to balance physician quality with the need for health care. But how? How do you get the supply of physicians just right? It's like...you have supply on one hand...and demand on the other. How do you balance supply and demand? I think there's some kind of system for that...hmmm...but, I guess they didn't teach me that in central planning school.
If the gov stepped in and mandated more seats in medical schools, there would be more doctors and less of a shortage.
If the government stepped in? The government has already stepped in, by creating this system in the first place!
The government needs to step out, by abolishing medical licenses. Once that's done, the market will come up with its own system of certification. And just like that, everyone will have real choices. Maybe some people will choose to go with a doctor who offers his services at rock-bottom prices, even though he has fewer years of schooling than the government would like. That might not be their first choice, but at least they would have that choice.
Now you might be thinking, 'Why should people have to make decisions based on how much money they have? Shouldn't everyone get the best doctor in the world?'
Sadly, we live in a world of scarcity, and no system - not even universal health care - can change that. So choices have to be made. I'd much rather make those choices myself.
But I'm not talking about day traders as a group, I'm talking about individuals. For example, imagine that a terrorist poisons the water supply in order to kill millions of people, and then a doctor saves everyone by pouring an antidote into the water supply. I suppose you can argue that the terrorist-doctor group accomplished absolutely nothing in the aggregate, but that doesn't change the fact that the terrorist performed a destructive action and the doctor performed a productive action.
Similarly, some traders allocate resources productively and some traders allocate resources destructively. Each trader's profits or losses tells us which group the market currently believes the trader is in. The fact that a day trader could have made more money by placing a long term bet does not take away from the fact that his profitable trades were still productive.
Now, the stock market may be a zero-sum game in the sense that, at any given time, every stock has an owner. However, that owner can set the price of his stock at any level he wants. Just because one stock went down $1, that doesn't mean another stock has to go up $1. A day trader, just like a long term trader, has the ability to move those prices either closer to, or farther away from, the levels that they should be at. Those levels will determine which companies are able to raise money and which are not. That's certainly not a zero-sum game.
Is there any real evidence that the market had insufficient liquidity before day traders?
If a day trader makes a profit, then his behavior is providing a benefit to society. After all, what's the difference between a day trader who makes a million dollars by buying and selling in ten-minute increments, and a long-term investor who makes a million dollars by buying and holding for a year? They're both doing the same thing: Buying low and selling high. In other words, providing money to companies when those companies need it the most.
Now, you might object: How does a speculator who buys homes when the prices are going up, and sells homes when prices are going down, benefit society? Or someone who buys dot-com stocks as they go up and sells them as they go down? Doesn't that sort of speculation just make bubbles worse?
The answer is that speculation causes prices to change faster. In other words, when the bubble is inflating, that trader will cause housing prices to rise even faster, and when the bubble is deflating, that trader will cause housing prices to fall faster. Therefore, the speculators who make accurate predictions will shorten the length of bubbles. In the case of a housing bubble, that means there will be less time for resources to be incorrectly shifted into the housing sector. And, of course, if everyone speculated correctly, there would be no housing bubbles to begin with.
...getting jerked around by for-profit insurance company bureaucrats...
Is that really the fault of the free market?
The real story of HMO's, of course, is one of considerable government meddling and regulation which ended in spiraling health costs which, not surprisingly, begat more government meddling and regulation.
HMO's are part of the legacy of price and wage controls supported by "conservative" president Richard Nixon who supported them (among other ill-conceived reasons) as a means for controlling health care costs. The high costs of the early seventies were not produced by free market health care, but by the ever expanding government giveaways of Medicare and Medicaid which removed individuals from the process of making health care transactions and created a situation where third parties (i.e. government) were making the payments to health care providers. You can imagine that in a system where the consumer of health services is responsible for none of the costs, a little excess demand might result. And that was indeed the result. No longer restrained by paying for health care, patients ended up in the doctor's office for every stubbed toe and every bloody nose resulting in spiraling health care costs due to such massively inflated demand.
The X dollars in circulation just have to circulate fast enough.
I think you're confusing cause and effect. For example, in hyperinflation, it's true that people will tend to spend their depreciating money very quickly. However, the currency is not losing value because people are spending their money quickly; the currency is losing value because the government is rapidly expanding the money supply.
Why do you think we had deflation during most of the 19th century? Because people spent their money slower and slower? No, it was because the money supply was relatively stable, while the number of goods rose.
...building on bubble after bubble. But blaming it on FRB is just plain wrong.
Did you ever notice that bubbles tend to grow when the fractional reserve banks are quickly expanding the money supply, and bubbles tend to pop when the rapid expansion finally slows or stops? There certainly seems to be a connection.
What blows my mind is how liberals often act like the Great Depression somehow vindicated their case against the unregulated free market. The reality is that the Austrian economists were vindicated. They said, "Don't inflate the money supply." But, of course, that's what the Fed and the FRBs did during the 1920's, and a bubble grew. The Austrians said, "Do nothing. Let the economy fix itself." But, unlike in previous panics, Hoover did not listen. He intervened, and the economy grew worse. Then Roosevelt intervened even more, and things got so bad that we now call it the Great Depression. And then there was WW2, which further devastated the economy. Finally, when the government lifted the war-time price controls, prosperity returned.
But now, Hoover is remembered as a non-interventionist, when he in fact intervened more than any president before him. Perhaps Bush will be remembered as a non-interventionist as well, because, just as Hoover did not intervene as much as Roosevelt, Bush did not intervene as much as Obama.
Here we are in the 21st century, and we still haven't learned out lessons. Look at what the Fed has done to the monetary base since October. That's a ticking time bomb. Also, we were told that if we didn't pass the stimulus, unemployment would go all the way to 9%. Well, we passed the stimulus, and now unemployment is 9.8% and still climbing! We've increased the minimum wage (i.e. made low-paying jobs illegal), extended unemployment insurance (i.e. took money from employers and used it to pay people to stay unemployed) and now teenage unemployment is over 20%. Isn't fucking with the economy fun?
Christ. Hopefully, when we start getting 1970's style stagflation, people will finally wake up and the pendulum will swing back towards the free market. But I'm not holding my breath.
That's one way to look at it, but here is a different take:
...voters diluted the Gann Spending Limit in 1990, when they passed Proposition 111, exempting infrastructure projects, disaster spending and a number of other state expenditures from the spending limit.
Prop. 111 freed politicians in Sacramento to use the revenues that gushed in during the dot-com boom and housing bubble to grow the state budget to unsustainable levels. If Gann hadn't been neutered, a Reason Foundation study found in February, California would have been rolling in a $15 billion surplus this year.
After all, those two titles surely took different amounts of man hours to develop...
That has nothing to do with determining the price. All that matters is how much consumers are willing to pay, and that is determined by supply and demand.
...$12 to retailer, $5 to discounts/returns/retail marketing, $10 toward manufacturing costs and shipping.
Costs do not determine price. It's the other way around: Since retailers know they will be able to sell a game for $60, they are willing to pay $48 to stock it on their shelves. And so on down the supply chain.
Suppose that consumers were suddenly willing to pay $70 for games. Because retailers know they can charge more, they will probably be willing to pay more to stock the game. In other words, costs will rise if consumers are willing to pay more.
But, on the other hand, rising costs do not necessarily lead to price increases. For example, if $15 was charged for manufacturing costs and shipping (instead of $10), games might still go for $60, because consumer demand has not changed. The price of games would only go up if the increase in costs caused the supply of games to decrease (or if the market anticipated a decrease in supply).
So, why do most games cost $60? It's all supply and demand. Gamers, in general, are not willing to pay more than $60, no matter how much time and money was put into a game. On the other hand, if a game costs less than $60, less games may be sold, because many consumers believe (rightly or wrongly) that a lower price indicates lower quality. In time, games will probably cost more than $60, because the federal reserve is increasing the supply of dollars at a much faster rate than the supply of games.
The essential implication seems to be that your longevity in employment has absolutely nothing to do with your actual work.
Depends on who you're working for. My boss respects me, appreciates the work I do, gives me a lot of freedom, and insulates me and the rest of his team from the politics. And we, in turn, make him look good (at least, that's what he tells us).
My advice is, if you have a bad boss who doesn't appreciate you, then start looking for a new job. Not only will you improve your own life when you find that new job, but when you leave, your ex-employer may start to realize that your ex-boss is driving the good employees away.
Also, try to save up a big pile of cash, because it makes every day less stressful. It's easier to say to your bad boss that you're not working the weekend, because you know that even in the worst case scenario (i.e. you lose your job), you can still live comfortably by falling back on your savings. The co-workers I know who complain very emotionally about bad bosses are usually the same ones living paycheck to paycheck. If you have the money to fall back on, then it's much easier to just forget about the politics and what your boss thinks of you. Just think of a bad boss as a stepping stone you're using to further your career. In the long-term, he has zero power over you.
In summary, there are good bosses and bad bosses out there. It's up to us (the employees) to act as a fitness function. In other words, we must leave the bad bosses and join the good bosses, so that businesses are forced to evolve into better places to work.
The idea that a person's order of preferences is well-defined...
But you see, that's the genius of praxeology: It's the study of human action, and action is always well-defined. If I offer you a red shirt or a blue shirt, then the action you take will reveal your preference. Either you will choose the red shirt or the blue shirt. How you came to your decision does not really matter.
Now, if I could present you with every possible combination of goods at the same instant in time, then I would have a well-ordered list of your preferences. I might not be able to read your mind, but I could still make my list by observing your actions.
In absence of knowledge...I can not make any prediction of what a person will do.
And that's perfectly consistent with praxeology. Praxeology does not say how people determine their preferences...it merely states that these preferences exist, and that preferences are revealed through action.
For example, suppose that we lived in a world without any uncertainty, and therefore, no risk. Even in that situation, we would still have interest rates. The interest rates would be determined by time preferences...that is, the degree to which people prefer present goods to future goods. We can't say exactly how each individual determines his time preference; we can only say that his time preference exists. And knowing that people have time preferences allows you to ask questions such as, "What happens when the government changes interest rates, even though people's time preferences have not changed?"
...a misallocation of investment funds into real estate.
...the CDS debacle...
Seems to me that the former is mostly responsible for the latter. But you say one is an example of government policy, and the other is supposed to be an example of the government keeping its hands off?
I guess I'm not sure how this is supposed to prove that praxeology is absurd. Suppose you like vanilla ice cream, but I give you a punishment every time you taste vanilla ice cream, and I give you a reward every time you taste chocolate ice cream. Maybe after that, you'll start preferring chocolate ice cream. So what? Your preferences have changed slightly, that is all. Your conscious actions are still intended to improve your satisfaction. The only thing that has changed is what satisfies you.
Of course, maybe you don't like my example (that's why I asked for a concrete one from you).
Now, I know that some people say Austrian reasoning is basically a tautology. And I understand that, because I don't see how you can disprove praxeology. But you can't find a triangle that disproves Pythagorean's theorem, either; does that mean Pythagorean's theorem is useless?
Would there be more profit involved in building an electric transit system that brought them close to their destination, or in selling every single one of them a car, gasoline to power it, and then charging them for the road construction and maintenance?
Suppose company A provides the former service and company B provides the latter service. Assuming the consumers value the services equally (i.e. both services get the customer from point A to point B), then each company must charge an equal price to avoid losing business to its competitor. Therefore, the company with the lower costs will be more profitable.
I pay maybe $20 a month to have running water in my little apartment. How much would I be willing to pay? Probably ten times as much.
Yes, but how much you're willing to pay is just one factor in price determination. If the supply of local, drinkable water increased, you would be able to negotiate a lower price on the open market, regardless of the fact that you would be "willing to pay more".
First off, if society has a low supply of water, but the demand for water is high, then the price of water should be high.
So, let's assume that we allowed prices to rise. In that case, companies with existing water supplies would earn high profit margins. That would, in turn, encourage competitors to move in and expand the supply of water (the supply of water on the planet may be fixed, but the supply of local, drinkable water is a variable).
Of course, that process would never be allowed to run its course. The government would try to "fix" the high prices with price controls, which would lead to shortages. And the government would attempt to fix the shortages it created by implementing a rationing scheme. It would call this scheme "conservation", and anyone who used "too much" water would be seen as irresponsible, if not criminal.
Thus, the government's solution is to conserve; to lower consumption. The market's solution is to increase supply. Which way is better? You tell me.
Legally? Yes. But do I think collective bargaining is a good idea? No.
Collective bargaining is a price control that is voluntarily agreed upon. Just like government price controls, you get shortages when the price is too low and a surpluses when the price is too high. Unions hold the price of labor too high, which creates a surplus of labor (i.e. unemployment) in the unionized industry.
What makes price controls particularly horrible is that they hurt the people at the margins. Take, for example, the record high teenage unemployment we have right now. If it weren't for the minimum wage, teenagers would be able to get jobs by asking for a lower wage. But they don't have that option, so they are forced into unemployment.
Just like the minimum wage, you might think that being in a union or a cartel is in your interest, but it's not. Being in a union means you can't guarantee yourself a job by asking for less money or benefits. Being in a cartel means you can't undercut your inefficient competitors with lower prices.
Re:Virtual bailout needed!
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Virtual Bank Woes
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· Score: 2, Interesting
We clearly need a virtual federal reserve and a bernanke-borg.
Actually, what they need to do is get rid of fractional reserve banking.
You want to put your money somewhere safe? Put it in a full reserve bank (a bank that is NOT allowed to loan out your money) in exchange for a small storage fee.
You want to make money by loaning it out? Buy bonds. You can always sell your bonds if you need the money immediately. Sure, there is a risk that you'll lose some money, but investments always involve risks. Risk can never be eliminated; it can only be transferred (e.g. the FDIC transfers risk to innocent tax payers, which creates moral hazards).
Under the above system, there will be no more bank runs. But, hey, if the admins want to try a virtual federal reserve, then I wish them the best of luck. When they start having virtual business cycles and virtual bailouts, maybe they'll reflect on their mistakes. Or, if they act like their real world counter-parts, I guess they'll try using more regulation. Because regulation is like violence (and XML): If it doesn't solve your problem, you're not using enough of it.
If GM had escaped from its union contracts through a bankruptcy...
Why should GM "escape" its union contracts through a bankruptcy?
Can't we just treat the union contracts as a liability? During the bankruptcy process, all we have to do is transfer the shares from the current shareholders to the creditors. If creditor A is owed $20 billion, creditor B is owed $30 billion, and creditor C is owed $40 billion, then give them 22%, 33%, and 44% of the shares, respectively. Anything that is owed to the unions (e.g. the net present value of every union member's pension) would be taken care of by this process, since the debts owed to the unions would be treated just like any other debt owed to a creditor.
Once this process is complete, there are NO liabilities left, by definition. The creditors are now the new shareholders. They elect their board of directors, and the directors try their best to make the new shareholders happy. Maybe that means liquidating the GM assets, maybe it means trying to keep the car company going. In either case, there are no union contracts that would need to be "escaped". Those contracts were with the original company, and that company no longer exists. That's not to say the liabilities demanded by those contracts are "forgotten" or "escaped"; rather, the liabilities between the original company and the unions would be considered to be "paid off" when the shares were transferred from GM to its creditors.
So, why does the government need to get involved? Why should the bankruptcy process be political?
...those practices become useless as they overarchitect the system into a corner.
Can you expand on this? I thought that over-architecture means that your code is very abstract and modular, perhaps to an unnecessary degree. Certainly, there are disadvantages to over-architecting, but how would it force your system "into a corner"? I would think that under-architecture would be the most likely cause of hard-to-change code.
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Bad example. The Wikipedia article you linked to explains what happened:
The major flaw of the deregulation scheme was that it was an incomplete deregulation--that is, "middleman" utility distributors continued to be regulated and forced to charge fixed prices, and continued to have limited choice in terms of electricity providers. Other, less catastrophic energy deregulation schemes, such as Pennsylvania's, have generally deregulated utilities but kept the providers regulated, or deregulated both.
The California electricity crisis is an example of the chaos that partial deregulation creates. Total regulation may be better, but you still get the socialist calculation problem. In other words, without prices, bureaucrats will make arbitrary decisions that create an under-supply or an over-supply of the goods they control. And, of course, the "problem" with the free market is that consumers have to pay the price set by supply and demand (oh, the horror!).
In summary, partial deregulation < total regulation < free market.
Agreed. Arizona is just looking out for their own good. The amount of drugs and violence brought over by illegals is astounding. It has nothing to do with race/ethnicity/etc, it's just defending communities.
Why is it unacceptable to discriminate on the basis of race and gender, but it's perfectly fine to make the exact same arguments on the basis of national origin? If you said "The amount of drugs and violence spread by black people is astounding, so defending our white communities is just common sense", you'd be making a racist statement. But so long as we're discriminating on the basis of geography and not skin color, it's all supposed to be fine? I don't get it.
She basically took our investment, used us to build up a caseload and a revenue stream, and then decided to call it "her" business.
...a small therapy business that we took out loans for every penny we're worth to finance, advertise, brand, and build from the ground up.
Everyone uses each other in capitalism. You used her to run a second office. She used you to build up a list of contacts. The relationship was a mutually beneficial one.
People can not be owned, and therefore can't be stolen. Thus, she did not "steal" your therapists or your patients. They just chose her over you. That's competition. The fact that she won the competition means that her sense of self-worth was not "inflated"; rather, her sense of self-worth was accurate and your sense of her worth was deflated.
It seems that director found a cheaper way to advertise: Build up your reputation and business relationships by working for an established business.
By the way, when you hired her, you could have brought her on as a partner and offered her some share of profits and costs, to make it less likely that she would become a competitor. But you didn't do that. Now, maybe there are some more facts about this situation that I don't know, but based on what you have told us, it sounds like she didn't do anything wrong.
I completely understand, because I felt the same way when I graduated college with a computer science degree. I had a part-time programming job during college, but that wasn't enough. No one was willing to take a chance on me.
So, what did I do? I lowered my expectations and started applying to any job that was remotely technical. I managed to land a technical support job at a local university. I thought to myself, "This is a dead-end job. I'm making $13 an hour, which isn't too bad for the work I'm doing. But I'm not using any of my programming skills. I'm just talking on the phone."
Three months later, however, I was able to land a job as an application engineer: A job where I would be talking to customers on the phone about problems that required C/C++ knowledge. So, the job that I thought was "dead-end" was actually crucial for my career path, because it gave me the technical support experience I needed to land the application engineering job. And after working as an application engineer for a couple of years, I was able to convince the managers that I had what it took to be a software engineer, which was the job I wanted in the first place.
So, what I'm saying is, start applying to any job that involves any kind of technical work, even if you won't be using your degree, because you never know what paths will open up.
So if the government is a bunch of incompetent, inefficient morons who can never be as good as private industry, then why the hell do you care if they give people the OPTION of choosing a government plan?
I can answer that. It's because the ONLY reason to offer a government option instead of a private option is so that the government option will get some unfair advantage. Maybe the plan will receive tax money. Maybe the plan will receive a special tax break. It may be subtle, but there will be some unfair advantage. If there wasn't one, then the public option supporters would just start their own, private co-op. There would be no need to go through the government, and no need to make compromises with republicans or conservative democrats.
The government does not have some sort of magic power that will make the production process more efficient. Anything the government does through force could instead be done by private parties, so long as all of the parties involved will benefit from cooperation. If someone tells you that the government can make something more efficient, then keep a sharp eye on your wallet, because it's about to be picked.
it is foolish to assert there is no deity
Suppose you're a juror in a case where there is a ton of evidence against the defendant. But he has a defense: He says that it was his "invisible friend" that actually committed the crime and left all that damning evidence.
"Can you prove that my invisible friend doesn't exist?" he asks. "If not, then you can't convict me!"
Would you be able to say to yourself, "I know that his invisible friend does not exist"? If you would say that, then why can't I use similar logic to say "I know that God does not exist"?
If you wouldn't say "I know that his invisible friend does not exist", then it seems like you could never use the word "know". After all, if it's possible that invisible magical beings really do exist, then it must be equally possible that everything that appears to exist is simply an illusion (e.g. you're living in the matrix)! If that's the case, then you can't "know" anything and the word becomes meaningless.
And a lower average quality of physician.
Oh my god! No, we can't have that.
In fact, we need to raise the average quality of physician. But how? I know! How about, we only hand out one medical license every four years to the brightest medical student in the world? That would cause the average quality of physicians to sky rocket! Sure, a bunch of people would die from lack of health care, but we mustn't let facts get in the way of good central planning.
I suppose some people would say that we need to balance physician quality with the need for health care. But how? How do you get the supply of physicians just right? It's like...you have supply on one hand...and demand on the other. How do you balance supply and demand? I think there's some kind of system for that...hmmm...but, I guess they didn't teach me that in central planning school.
If the gov stepped in and mandated more seats in medical schools, there would be more doctors and less of a shortage.
If the government stepped in? The government has already stepped in, by creating this system in the first place!
The government needs to step out, by abolishing medical licenses. Once that's done, the market will come up with its own system of certification. And just like that, everyone will have real choices. Maybe some people will choose to go with a doctor who offers his services at rock-bottom prices, even though he has fewer years of schooling than the government would like. That might not be their first choice, but at least they would have that choice.
Now you might be thinking, 'Why should people have to make decisions based on how much money they have? Shouldn't everyone get the best doctor in the world?'
Sadly, we live in a world of scarcity, and no system - not even universal health care - can change that. So choices have to be made. I'd much rather make those choices myself.
...day traders as a group...
But I'm not talking about day traders as a group, I'm talking about individuals. For example, imagine that a terrorist poisons the water supply in order to kill millions of people, and then a doctor saves everyone by pouring an antidote into the water supply. I suppose you can argue that the terrorist-doctor group accomplished absolutely nothing in the aggregate, but that doesn't change the fact that the terrorist performed a destructive action and the doctor performed a productive action.
Similarly, some traders allocate resources productively and some traders allocate resources destructively. Each trader's profits or losses tells us which group the market currently believes the trader is in. The fact that a day trader could have made more money by placing a long term bet does not take away from the fact that his profitable trades were still productive.
Now, the stock market may be a zero-sum game in the sense that, at any given time, every stock has an owner. However, that owner can set the price of his stock at any level he wants. Just because one stock went down $1, that doesn't mean another stock has to go up $1. A day trader, just like a long term trader, has the ability to move those prices either closer to, or farther away from, the levels that they should be at. Those levels will determine which companies are able to raise money and which are not. That's certainly not a zero-sum game.
Is there any real evidence that the market had insufficient liquidity before day traders?
If a day trader makes a profit, then his behavior is providing a benefit to society. After all, what's the difference between a day trader who makes a million dollars by buying and selling in ten-minute increments, and a long-term investor who makes a million dollars by buying and holding for a year? They're both doing the same thing: Buying low and selling high. In other words, providing money to companies when those companies need it the most.
Now, you might object: How does a speculator who buys homes when the prices are going up, and sells homes when prices are going down, benefit society? Or someone who buys dot-com stocks as they go up and sells them as they go down? Doesn't that sort of speculation just make bubbles worse?
The answer is that speculation causes prices to change faster. In other words, when the bubble is inflating, that trader will cause housing prices to rise even faster, and when the bubble is deflating, that trader will cause housing prices to fall faster. Therefore, the speculators who make accurate predictions will shorten the length of bubbles. In the case of a housing bubble, that means there will be less time for resources to be incorrectly shifted into the housing sector. And, of course, if everyone speculated correctly, there would be no housing bubbles to begin with.
Is that really the fault of the free market?
The real story of HMO's, of course, is one of considerable government meddling and regulation which ended in spiraling health costs which, not surprisingly, begat more government meddling and regulation.
HMO's are part of the legacy of price and wage controls supported by "conservative" president Richard Nixon who supported them (among other ill-conceived reasons) as a means for controlling health care costs. The high costs of the early seventies were not produced by free market health care, but by the ever expanding government giveaways of Medicare and Medicaid which removed individuals from the process of making health care transactions and created a situation where third parties (i.e. government) were making the payments to health care providers. You can imagine that in a system where the consumer of health services is responsible for none of the costs, a little excess demand might result. And that was indeed the result. No longer restrained by paying for health care, patients ended up in the doctor's office for every stubbed toe and every bloody nose resulting in spiraling health care costs due to such massively inflated demand.
-- The Myth of the Free-Market HMO.
The X dollars in circulation just have to circulate fast enough.
...building on bubble after bubble. But blaming it on FRB is just plain wrong.
I think you're confusing cause and effect. For example, in hyperinflation, it's true that people will tend to spend their depreciating money very quickly. However, the currency is not losing value because people are spending their money quickly; the currency is losing value because the government is rapidly expanding the money supply.
Why do you think we had deflation during most of the 19th century? Because people spent their money slower and slower? No, it was because the money supply was relatively stable, while the number of goods rose.
Did you ever notice that bubbles tend to grow when the fractional reserve banks are quickly expanding the money supply, and bubbles tend to pop when the rapid expansion finally slows or stops? There certainly seems to be a connection.
What blows my mind is how liberals often act like the Great Depression somehow vindicated their case against the unregulated free market. The reality is that the Austrian economists were vindicated. They said, "Don't inflate the money supply." But, of course, that's what the Fed and the FRBs did during the 1920's, and a bubble grew. The Austrians said, "Do nothing. Let the economy fix itself." But, unlike in previous panics, Hoover did not listen. He intervened, and the economy grew worse. Then Roosevelt intervened even more, and things got so bad that we now call it the Great Depression. And then there was WW2, which further devastated the economy. Finally, when the government lifted the war-time price controls, prosperity returned.
But now, Hoover is remembered as a non-interventionist, when he in fact intervened more than any president before him. Perhaps Bush will be remembered as a non-interventionist as well, because, just as Hoover did not intervene as much as Roosevelt, Bush did not intervene as much as Obama.
Here we are in the 21st century, and we still haven't learned out lessons. Look at what the Fed has done to the monetary base since October. That's a ticking time bomb. Also, we were told that if we didn't pass the stimulus, unemployment would go all the way to 9%. Well, we passed the stimulus, and now unemployment is 9.8% and still climbing! We've increased the minimum wage (i.e. made low-paying jobs illegal), extended unemployment insurance (i.e. took money from employers and used it to pay people to stay unemployed) and now teenage unemployment is over 20%. Isn't fucking with the economy fun?
Christ. Hopefully, when we start getting 1970's style stagflation, people will finally wake up and the pendulum will swing back towards the free market. But I'm not holding my breath.
That's one way to look at it, but here is a different take:
...voters diluted the Gann Spending Limit in 1990, when they passed Proposition 111, exempting infrastructure projects, disaster spending and a number of other state expenditures from the spending limit.
Prop. 111 freed politicians in Sacramento to use the revenues that gushed in during the dot-com boom and housing bubble to grow the state budget to unsustainable levels. If Gann hadn't been neutered, a Reason Foundation study found in February, California would have been rolling in a $15 billion surplus this year.
After all, those two titles surely took different amounts of man hours to develop...
...$12 to retailer, $5 to discounts/returns/retail marketing, $10 toward manufacturing costs and shipping.
That has nothing to do with determining the price. All that matters is how much consumers are willing to pay, and that is determined by supply and demand.
Costs do not determine price. It's the other way around: Since retailers know they will be able to sell a game for $60, they are willing to pay $48 to stock it on their shelves. And so on down the supply chain.
Suppose that consumers were suddenly willing to pay $70 for games. Because retailers know they can charge more, they will probably be willing to pay more to stock the game. In other words, costs will rise if consumers are willing to pay more.
But, on the other hand, rising costs do not necessarily lead to price increases. For example, if $15 was charged for manufacturing costs and shipping (instead of $10), games might still go for $60, because consumer demand has not changed. The price of games would only go up if the increase in costs caused the supply of games to decrease (or if the market anticipated a decrease in supply).
So, why do most games cost $60? It's all supply and demand. Gamers, in general, are not willing to pay more than $60, no matter how much time and money was put into a game. On the other hand, if a game costs less than $60, less games may be sold, because many consumers believe (rightly or wrongly) that a lower price indicates lower quality. In time, games will probably cost more than $60, because the federal reserve is increasing the supply of dollars at a much faster rate than the supply of games.
The essential implication seems to be that your longevity in employment has absolutely nothing to do with your actual work.
Depends on who you're working for. My boss respects me, appreciates the work I do, gives me a lot of freedom, and insulates me and the rest of his team from the politics. And we, in turn, make him look good (at least, that's what he tells us).
My advice is, if you have a bad boss who doesn't appreciate you, then start looking for a new job. Not only will you improve your own life when you find that new job, but when you leave, your ex-employer may start to realize that your ex-boss is driving the good employees away.
Also, try to save up a big pile of cash, because it makes every day less stressful. It's easier to say to your bad boss that you're not working the weekend, because you know that even in the worst case scenario (i.e. you lose your job), you can still live comfortably by falling back on your savings. The co-workers I know who complain very emotionally about bad bosses are usually the same ones living paycheck to paycheck. If you have the money to fall back on, then it's much easier to just forget about the politics and what your boss thinks of you. Just think of a bad boss as a stepping stone you're using to further your career. In the long-term, he has zero power over you.
In summary, there are good bosses and bad bosses out there. It's up to us (the employees) to act as a fitness function. In other words, we must leave the bad bosses and join the good bosses, so that businesses are forced to evolve into better places to work.
The idea that a person's order of preferences is well-defined...
But you see, that's the genius of praxeology: It's the study of human action, and action is always well-defined. If I offer you a red shirt or a blue shirt, then the action you take will reveal your preference. Either you will choose the red shirt or the blue shirt. How you came to your decision does not really matter.
Now, if I could present you with every possible combination of goods at the same instant in time, then I would have a well-ordered list of your preferences. I might not be able to read your mind, but I could still make my list by observing your actions.
In absence of knowledge...I can not make any prediction of what a person will do.
And that's perfectly consistent with praxeology. Praxeology does not say how people determine their preferences...it merely states that these preferences exist, and that preferences are revealed through action.
For example, suppose that we lived in a world without any uncertainty, and therefore, no risk. Even in that situation, we would still have interest rates. The interest rates would be determined by time preferences...that is, the degree to which people prefer present goods to future goods. We can't say exactly how each individual determines his time preference; we can only say that his time preference exists. And knowing that people have time preferences allows you to ask questions such as, "What happens when the government changes interest rates, even though people's time preferences have not changed?"
...a misallocation of investment funds into real estate.
...the CDS debacle...
Seems to me that the former is mostly responsible for the latter. But you say one is an example of government policy, and the other is supposed to be an example of the government keeping its hands off?
the fact that operant conditioning works...
I guess I'm not sure how this is supposed to prove that praxeology is absurd. Suppose you like vanilla ice cream, but I give you a punishment every time you taste vanilla ice cream, and I give you a reward every time you taste chocolate ice cream. Maybe after that, you'll start preferring chocolate ice cream. So what? Your preferences have changed slightly, that is all. Your conscious actions are still intended to improve your satisfaction. The only thing that has changed is what satisfies you.
Of course, maybe you don't like my example (that's why I asked for a concrete one from you).
Now, I know that some people say Austrian reasoning is basically a tautology. And I understand that, because I don't see how you can disprove praxeology. But you can't find a triangle that disproves Pythagorean's theorem, either; does that mean Pythagorean's theorem is useless?
an absurd model of human behavior
Give me a concrete example that demonstrates the absurdity of praxeology, if you can.
Would there be more profit involved in building an electric transit system that brought them close to their destination, or in selling every single one of them a car, gasoline to power it, and then charging them for the road construction and maintenance?
Suppose company A provides the former service and company B provides the latter service. Assuming the consumers value the services equally (i.e. both services get the customer from point A to point B), then each company must charge an equal price to avoid losing business to its competitor. Therefore, the company with the lower costs will be more profitable.
I pay maybe $20 a month to have running water in my little apartment. How much would I be willing to pay? Probably ten times as much.
Yes, but how much you're willing to pay is just one factor in price determination. If the supply of local, drinkable water increased, you would be able to negotiate a lower price on the open market, regardless of the fact that you would be "willing to pay more".
First off, if society has a low supply of water, but the demand for water is high, then the price of water should be high.
So, let's assume that we allowed prices to rise. In that case, companies with existing water supplies would earn high profit margins. That would, in turn, encourage competitors to move in and expand the supply of water (the supply of water on the planet may be fixed, but the supply of local, drinkable water is a variable).
Of course, that process would never be allowed to run its course. The government would try to "fix" the high prices with price controls, which would lead to shortages. And the government would attempt to fix the shortages it created by implementing a rationing scheme. It would call this scheme "conservation", and anyone who used "too much" water would be seen as irresponsible, if not criminal.
Thus, the government's solution is to conserve; to lower consumption. The market's solution is to increase supply. Which way is better? You tell me.
So do you support collective bargaining or not?
Legally? Yes. But do I think collective bargaining is a good idea? No.
Collective bargaining is a price control that is voluntarily agreed upon. Just like government price controls, you get shortages when the price is too low and a surpluses when the price is too high. Unions hold the price of labor too high, which creates a surplus of labor (i.e. unemployment) in the unionized industry.
What makes price controls particularly horrible is that they hurt the people at the margins. Take, for example, the record high teenage unemployment we have right now. If it weren't for the minimum wage, teenagers would be able to get jobs by asking for a lower wage. But they don't have that option, so they are forced into unemployment.
Just like the minimum wage, you might think that being in a union or a cartel is in your interest, but it's not. Being in a union means you can't guarantee yourself a job by asking for less money or benefits. Being in a cartel means you can't undercut your inefficient competitors with lower prices.
We clearly need a virtual federal reserve and a bernanke-borg.
Actually, what they need to do is get rid of fractional reserve banking.
You want to put your money somewhere safe? Put it in a full reserve bank (a bank that is NOT allowed to loan out your money) in exchange for a small storage fee.
You want to make money by loaning it out? Buy bonds. You can always sell your bonds if you need the money immediately. Sure, there is a risk that you'll lose some money, but investments always involve risks. Risk can never be eliminated; it can only be transferred (e.g. the FDIC transfers risk to innocent tax payers, which creates moral hazards).
Under the above system, there will be no more bank runs. But, hey, if the admins want to try a virtual federal reserve, then I wish them the best of luck. When they start having virtual business cycles and virtual bailouts, maybe they'll reflect on their mistakes. Or, if they act like their real world counter-parts, I guess they'll try using more regulation. Because regulation is like violence (and XML): If it doesn't solve your problem, you're not using enough of it.
anyone who was predicting that housing wasn't a bubble was either lying or he is a charlatan.
Right. Also, no one in the market is a true Scotsman. Anyone who says otherwise is either lying or he is a charlatan.
If GM had escaped from its union contracts through a bankruptcy...
Why should GM "escape" its union contracts through a bankruptcy?
Can't we just treat the union contracts as a liability? During the bankruptcy process, all we have to do is transfer the shares from the current shareholders to the creditors. If creditor A is owed $20 billion, creditor B is owed $30 billion, and creditor C is owed $40 billion, then give them 22%, 33%, and 44% of the shares, respectively. Anything that is owed to the unions (e.g. the net present value of every union member's pension) would be taken care of by this process, since the debts owed to the unions would be treated just like any other debt owed to a creditor.
Once this process is complete, there are NO liabilities left, by definition. The creditors are now the new shareholders. They elect their board of directors, and the directors try their best to make the new shareholders happy. Maybe that means liquidating the GM assets, maybe it means trying to keep the car company going. In either case, there are no union contracts that would need to be "escaped". Those contracts were with the original company, and that company no longer exists. That's not to say the liabilities demanded by those contracts are "forgotten" or "escaped"; rather, the liabilities between the original company and the unions would be considered to be "paid off" when the shares were transferred from GM to its creditors.
So, why does the government need to get involved? Why should the bankruptcy process be political?
...those practices become useless as they overarchitect the system into a corner.
Can you expand on this? I thought that over-architecture means that your code is very abstract and modular, perhaps to an unnecessary degree. Certainly, there are disadvantages to over-architecting, but how would it force your system "into a corner"? I would think that under-architecture would be the most likely cause of hard-to-change code.