I think we'll have to agree to disagree, but I hoped you would get more out of that paper than just "Occam's Razor". Here are the points, about the differences between physics and economics, that I found important:
"The economist starts with a knowledge of ultimate causes. He is already, at the outset of his enterprise in the position which the physicist only attains after ages of laborious research...."
"In physics the axioms and therefore the deductions are in themselves purely formal and only acquire meaning "operationally" insofar as they can explain and predict given facts. On the contrary, in praxeology, in the analysis of human action, the axioms themselves are known to be true and meaningful. As a result, each verbal step-by-step deduction is also true and meaningful; for it is the great quality of verbal propositions that each one is meaningful, whereas mathematical symbols are not meaningful in themselves."
"[The econometrician] cannot help admitting that there are no "behavior constants." Nonetheless, he wants to introduce some numbers, arbitrarily chosen on the basis of historical fact, as "unknown behavior constants." The sole excuse he advances is that his hypotheses are "saying only that these unknown numbers remain reasonably constant through a period of years."...But this is something fundamentally different from the constants of physics. It is the assertion of a historical fact, not of a constant that can be resorted to in attempts to predict future events."
"The highly praised equations are, insofar as they apply to the future, merely equations in which all quantities are unknown."
"In the mathematical treatment of physics the distinction between constants and variables makes sense; it is essential in every instance of technological computation. In economics there are no constant relations between various magnitudes. Consequently all ascertainable data are variables, or what amounts to the same thing, historical data. The mathematical economists reiterate that the plight of mathematical economics consists in the fact that there are a great number of variables. The truth is that there are only variables and no constants. It is pointless to talk of variables where there are no invariables."
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?
Multi-threading is hard when your threads share memory with each other. At first, it seems easy enough, but as your program becomes more complicated, you'll have to use more mutexes. The more mutexes you have, the more likely it is that you will run into dead-lock. And even after your program is working, you'll be afraid to modify certain parts of it, because you know that one wrong move could lead to a race condition or a dead lock.
So, what's the solution? In my opinion, whenever you're writing a complicated, multi-threaded program, you need to use the actor pattern. In other words, instead of sharing memory, have your threads (i.e. actors) send messages to each other. Suddenly, everything is pretty simple. You don't have to worry about dead-lock anymore. You don't have to worry that some other thread is going to mess with one of your structures. For me, the actor pattern was a life-saver.
Sure, I still share memory here and there, but whenever the program threatens to get away from me, I use the actor pattern to drive away the complexity.
It retards the progression of democracy and social justice abroad and creates future demand for corruption.
I disagree that all bribery is bad. As Murray Rothbard writes:
"What of bribery of government officials? Here a distinction must be made between "aggressive" and "defensive" bribery; the first should be considered improper and aggressive, whereas the latter should be considered proper and legitimate. Consider a typical "aggressive bribe": a Mafia leader bribes police officials to exclude other, competing operators of gambling casinos from a certain territorial area. Here, the Mafioso acts in collaboration with the government to coerce competing gambling proprietors. The Mafioso is, in this case, an initiator, and accessory, to governmental aggression against his competitors. On the other hand, a "defensive bribe" has a radically different moral status. In such a case, for example, Robinson, seeing that gambling casinos are outlawed in a certain area, bribes policemen to allow his casino to operate - a perfectly legitimate response to an unfortunate situation."
"Defensive bribery, in fact, performs an important social function throughout the world. For, in many countries, business could not be transacted at all without the lubricant of bribery; in this way crippling and destructive regulations and exactions can be avoided. A "corrupt government," then, is not necessarily a bad thing; compared to an "incorruptible government" whose officials enforce the laws with great severity, "corruption" can at least allow a partial flowering of voluntary transactions and actions in a society."
Why would companies replace systems that are working well?
The question is not, 'Does the code work?', the question is, 'Does the code follow good design principles?' If the answer is 'No, the code is not well-designed', then maintenance can be very costly. I like the snippet from this page:
"I was once told by an instructor in a design patterns class that the Y2K problem wasn't caused by using 2 digits to represent 4. Instead, it was caused by doing so all over the place. While the reality of the situation is a little more complicated than that, the principle is true. If the date handling code had been all in one place, a single change would have fixed the whole codebase rather than having to pull tons of Cobol coders out of retirement to fix all the business applications."
I have a friend who fell for this scam. How did he fall for it? Well, even though he was suspicious of the check that he received from the scammer, his bank told him the check had cleared, and he saw that the money had been added to his account. So, he assumed everything was on the up and up. But a few days later, the bank said the check had bounced, and they froze my friend's account.
Now, why do banks add money to their customers' accounts before everything has been fully validated? Turns out the government is at it again:
"Banks are required to make funds available to customers within a few days of when the check is deposited -- even if the check has yet to clear. This law was enacted in the 1980s after consumers complained that banks were holding onto deposits for inordinate amounts of time. The law has, indeed, allowed consumers to access their money more quickly. But it's also provided another avenue for fraud." -- Con artists take advantage of check rules
you are basically saying a person has the same latitude to defend against loud music as they do physical assaults!
Extremely loud music is a type of physical assault. But that does not mean all assaults should be treated as equal. I, like most people, would much rather deal with loud music than, say, a punch to the face. So if I go over and punch my neighbor in the face, then I will have turned into the aggressor.
But, let's say I go over there and politely ask him to turn the music down and he refuses. In that case, I am certainly entitled to turn his radio down for him. If he tries to stop me, then he has become the aggressor. I am allowed to use the necessary force to end his aggression.
What if the "aggressor" won't turn down his radio, and I choose to either deck him or have the private police force do it
Come on. What would happen if a "normal" police officer asked some people to turn down their radio, and they told him "No"? Would he just shrug his shoulders and say, "Well, I tried"? No, he would tell them that if they don't turn down the radio, he's going to escalate the amount of force he is using. If they escalate in response, then he will keep escalating until the situation is under control. In a libertarian society, a normal person is entitled to do this, although I'm sure most people will choose to hire the services of a private police force. No matter who knocks on the door, the rules are the same. Is that so absurd?
One thing I want to add to my previous comment: If you did hire a private police officer to intervene on your behalf, then that officer would be liable if the court ruled in your neighbor's favor. In a libertarian society, saying "He paid me to do it" is not a valid defense. You would only be liable to the extent that you aided the officer. In other words, if the court rules that the officer was acting as an aggressor when he physically stopped the neighbor from playing the music, then you might be guilty of the lesser offense of 'aiding a criminal'.
For example, under current law, a police officer can come and disperse a noisy party after 11PM in many neighborhoods. If it were merely a contract, you'd have to suit to get the party to disperse. Is this what you envision?
In a libertarian/anarcho-capitalist society, if a neighbor is playing music that is loud enough to qualify as a nuisance, then they are aggressing against you. You have a right to stop that aggression yourself, or to hire a private police force to do so on your behalf. You do not need permission from a court. It is not until one of the parties involved files a lawsuit that the court will decide who was right and who was wrong. That decision will be based on who aggressed against who. The court may decide that you were the one aggressing against your neighbor, because you were unable to provide enough evidence that your neighbor was playing loud music (hopefully the private police officer will back you up with his testimony).
Of course, in a libertarian society, even if a court ruled against you, that would not prompt a government agency to arrest you. However, if the general public considers the court's opinion to be credible, then you will be ignoring that ruling at your peril.
Holding on to that, the only thing that separates the two goods must rely on scarcity? (supply and demand) to set the price
Price is always determined by supply and demand; cost is irrelevant. If I try to sell you a house, do you care about how much money I spent fixing it up? No, you only care about the end product.
I am really curious as to how you can justify person A being paid more than person B...?
Because the market is not a meritocracy. Consumers do not pay producers for working hard, for being highly educated, etc. Consumers pay producers because they value the end product. Often times, the market will look like a meritocracy, because hard work tends to result in more productivity. But it is consumers who decide winners and losers.
My point is that if you want to run a business that is as profitable as possible, then you should try to pay employees according to how much productivity they add to the company. In other words, if the employee was actually a third-party vendor, how much would you pay them for their product?
To the extent that you rely on silly rules (e.g. I won't pay Joe more than 7 times what I pay Bob) instead of relying on the market's method of valuation, you will be giving your employees the wrong incentives. That eventually leads to less than optimal productivity for your company as a whole, which hurts your bottom line. And a lower bottom line means that consumers are telling you, through their actions, that they do not value your end product as much. That's not a good thing, IMHO.
...a policy where no person could make more than seven times as much money as any other person in the company.
Imagine two goods, good A and good B, that are sold on the open market. Good A sells for a price that is eight times greater than good B. Person A was able to produce good A in one day, and person B was able to produce good B in one day. So, on the open market, person A makes eight times more money than person B in the same period of time. That means consumers have judged person A to be eight times more productive than person B, even if person B worked much harder!
So, if person A and person B happen to be working for the same company, why shouldn't their boss pay person A eight times more than person B? Why should their boss come up with some arbitrary limit?
Again, this assumes an equitable distribution of wealth between those who value a given piece of land as a preserve and those who might choose to mine it for something else.
No, it doesn't. Those who have more wealth will have a greater say about the existing wealth. It's not a democracy. Everyone is not equal. Some people are more productive than others, and in a free market, the most productive people (and those who inherit from the most productive people) will have the most say. This is not a distortion or flaw; rather, I am simply stating that those who create wealth, get to control wealth. Those who inherit wealth only do so because a wealth creator chose them as his beneficiary.
And again, since in the short term it's possible for those who value it only for the wealth they can extract from it to make more money than those who may have preservation in mind, those people are quite likely to have more money.
The wealth someone can 'extract' from a property is not set in stone; rather, the ways they can make money from a piece of land depend on what other people are willing to pay for. Saying that someone values land only for the wealth they can extract from it is just another way of saying that person is unselfish; he or she does not care about their own desires, but rather, they only concern themselves with the desires of their customers.
The owner is, of course, entitled to decide if he values (as an example) $500 today more than the possibility of $1000 in a week. Just because he chooses the short term, that does not mean his choice was 'wrong'. Consumers can also choose between their short term and long term desires, and there is no right answer.
Which is another way of saying that all real value is monetary value -- a highly dubious proposition.
I'm saying all values can be expressed through action. If a man hands over five dollars in exchange for a good, then his actions indicate that he values that good more than the five dollars. If that was not the case, then he would have kept the five dollars in his pocket. How can his actions not reflect his 'real values'?
Given this equation, individuals willing to prioritize more profitable uses will naturally become more wealthy than owners who aren't... which leads to the other kind of problem I pointed out.
What's the problem? If using land in a particular way brings in millions of dollars, and using it in an alternative way brings in very little money, then consumers are saying, with their money, that they would rather see the land used in the former way. If people really value a preserve, then they should be prepared to pay for it. The market does not care what you say -- it only cares what you do.
Suppose, for example, that a man claims that a preservation is just as important to him as gasoline. If, however, he spend hundreds of dollars a year on gasoline, and he only spends a small amount of money on preservation fees, then his actions do not match his words. The market responds to his actions, just as it should.
Now, you might be saying, "He only spends a small amount of money on preservation fees, because the fees are low."
However, fees, just like any other price, are not set arbitrarily.
The preservation owner has the option of charging what the market will bear. If the preservation owner does not charge what the market will bear, then he has only himself to blame for not being wealthy. If the owner does charge what the market will bear, but that results in very small fees, then that must be because consumers are only willing to pay small fees. Once again, if consumers truly consider preservation to be important, then they back up their words with their money.
Deregulation is fine if you are willing to accept a very unstable economy.
Actually, fractional reserve banking is what makes an economy unstable. But, so long as people are foolish enough to believe that creating money somehow helps the economy, we'll continue to have business cycles.
We had lassiez-faire prior to the 1930's, and along with that 7 depressions in a 50 year period, including the Great Depression and the Long Depression.
Nothing on the scale of the Great Depression ever happened before the Federal Reserve.
Also, unlike modern day recessions, prices actually fell during the recessions of the pre-Fed era. Sure, people had to deal with increased unemployment, but at least a single dollar could buy more goods. Nothing quite like the stagflation of the 70's, where people had to deal with increasing unemployment and sky-rocketing inflation at the same time, happened before the Federal Reserve. Not exactly a record to write home about.
If we flash forward to the current economic situation it is pretty clear that the proximate cause was the relaxation of reserve requirements for investment banks by the SEC in 2004.
Before central banks, there was no need for 'reserve requirements', because competition between the banks forced them to have higher reserve ratios. If bank A owed money to bank B, the debt had to be settled in gold. Therefore, any bank that did not have reserves on hand would quickly become insolvent.
It was only when the central bank removed all of the natural, free market checks on credit expansion, that reserve requirements were introduced to keep reserves from dwindling to nothing. Thus, the relaxation of reserve requirements is not a true move towards freedom, or deregulation. It is merely the government increasing the original distortion that was unleashed on the market when fractional reserve banks were freed from competition.
What happens when there is too much inventory because of extremely low consumption and thus too much investment. How does more investment help?
In economics, there can never be a such thing as 'too much inventory'. In fact, the entire point of all economic action is to create as many goods as possible. Sellers merely need to lower the prices of their goods in order to get their inventory to move. Yes, the sellers may end up selling at a loss and going out of business, but that is how the market corrects itself. The error during the boom was that businesses bid costs up too high, diverting production into lines that turned out to be unprofitable. Now, those prices must fall, so that production will be diverted back into profitable areas.
Investment is the key, because consumption can not happen without investment. If we invest more today, we will have more goods to consume tomorrow. It's that simple.
The misunderstanding that most observers have comes from being focused on adjusting the consumer to meet the needs of businesses. Obviously, businesses want consumption: The home builders want more home consumption, the oil companies want more oil consumption, etc. However, the point of the economy is for businesses to adjust to the needs of consumers. The fact that a lot of businesses are closing, and a lot of employees are being laid off, merely tells us that a lot of mistakes were made during the boom, and now a major adjustment is necessary. The best thing to do is to allow that adjustment to take place. If we continue to fight the adjustment, we'll only have less production and become more impoverished.
But since the financial sector isn't working, so if someone saves, the bank just sits on the money and it disappears.
"Hoarding" is never a problem. Let me explain: When someone receives income, there are three ways he can allocate it: Consumption, investment, or addition to his cash balance. Of course, an addition to his cash balance usually means depositing the money in a bank, but that changes nothing; it merely means that the bank will be presented with those same three choices.
Now, if everyone chooses to add more money to their cash balance, then that increases the demand for money, which causes wages and prices to go down. However, an increased demand for money has nothing to do with the consumption-to-investment ratio. An increased demand for money simply means that people are more willing to do without goods in exchange for money (because they want the protection against uncertainty that money provides). But the demand for money tells us nothing about how much people prefer consumption to investment, and that's what is really important.
The more that people are willing to invest, the greater our productivity will be. However, the only way to increase investment is to decrease consumption. The last thing we want to do right now is to encourage consumption; that's why the government's stimulus plan is such a bad idea.
I don't know why this is so hard for people to understand. For some reason, they think that consumption drives the economy. Well, if you found yourself on a deserted island, what would you do? You'd invest as much as possible (e.g. spend time building a raft), and consume whatever fruit and fish you find as slowly as possible, so that your resources would last.
But in the modern economy, people think we should just consume, consume, consume, so that no companies will go out of business. Well, guess what? Businesses are supposed to adapt to consumers, not the other way around! If there is less consumption in certain areas, then businesses should shift out of those areas and into the areas where they can prosper. And it's not as though a decrease in consumption means less people will be employed; businesses can always hire more people by expanding the stages of production (that's where the increased investment comes in). People think that decreased consumption means the end of the world! The reality is that a decrease in consumption is what allows the economy to grow.
Regardless of your political leanings, when it comes to debunking media distortions Media Matters rules!
Regardless of your political leanings? They say in their 'About Us' page that they're only interested in misinformation that forwards the conservative agenda. That's a shame. Why not correct misinformation from all sides?
...there are no damages for copyright infringement...
What about the fact that you lost control of your property? For example, suppose that you were away from your house. When you return, I tell you that I borrowed your car, took it out for a spin, and then returned your car in its original state (assume that's possible -- forget wear and tear). You wouldn't say, "You're right. I still have my original property in its original state. I haven't lost anything." No, you would say that you have the right to control how your property is used at all times.
So, if I write a book and keep it in my house, then no one can make a copy of it without violating my property rights. I could make a copy of that book, and then sell it to a consumer on the condition that they don't make any unauthorized copies of it. Perhaps I would say that I am merely leasing my property to them indefinitely, and granting them all rights (except for the right to make copies), but it's still technically my property. In that case, any unauthorized copies that surfaced would be evidence that someone, somewhere, must have either broken their contract with me, or stole my property from the person I leased it to. My damages are the fact that I've lost control of my property (i.e. the original book and the copies of it that I sold).
Would you agree with me that my property rights have been violated in the above scenario? Would you also agree that I should be compensated in some way for every unauthorized copy, since the unauthorized copies are clearly unjust enrichment?
If you want to argue WW2 pulled the US out of the Depression, then you're just saying the New Deal was too small.
I would argue that both the New Deal and WW2 were very bad for the economy. As an example: From 1923 to 1929, the square feet of office space in Chicago almost doubled. From 1931 to 1950, no new office buildings were erected and no new large hotel was built in Chicago. But I guess we did kill a lot of people and destroy a lot of buildings.
So, yes, WW2 "saved" us, in the same way that a broken window saves a glazier. But what if there had been no New Deal, and no second world war? Perhaps we might have had a real economic recovery during those years...
But when we're at the peak of a crisis, don't we indeed need a temporary relief to distribute the impact in time, so that we don't pay the full price now but pay some of it when we'll be a bit better off, economically?
What you have to understand is that there is just one pool of resources. We depend on that pool of resources to grow the economy. Every time the government pulls resources from that pool for the purpose of "relief" (i.e. consumption), we have fewer resources for growing the economy (i.e. investment).
For example, let's suppose that you lost your job. In order to give yourself more time, you start depending on credit cards. That strategy has a chance of paying off because you a relying on someone else's savings (i.e. the credit card company). But what if you couldn't rely on someone else's savings?
Suppose you were a restaurant owner, and you were running out of money. In order to save on your heating bill, you could burn all of your tables and chairs in the fireplace, telling yourself, "I'll buy more tables and chairs when I'm in a better position to afford them." The problem is, now your customers don't have anywhere to sit, so they don't come anymore. You tried to consume your own savings to give yourself some time, but you hurt your business by doing so, which means it will take even longer for you to get back on your feet.
Similarly, the government slows down the economy's recovery every time it tries to give people "relief". As mattwarden explained, the government's so-called investment is really just consumption (or "relief") disguised as an investment. Yes, it's better to pay people to build roads than to do nothing, but that doesn't mean resources are being used as efficiently as possible.
It's no broken window fallacy. In the broken fallacy nothing is gained from breaking the window and replacing it.
I agree. No wealth is being destroyed here.
Instead, the fallacy here is that people are focused on creating jobs, rather than wealth. The point of all economic activity is to allocate resources in order to create wealth (i.e. goods) -- not to create jobs. When someone says they want a job, what they are really saying is they want an income which they can use to purchase goods. Thus, the scarcity of paying jobs is the result of the scarcity of goods.
So, the government can certainly create jobs, but that is pointless if the job creation scheme results in a greater scarcity of goods than we would otherwise have. The market is already dedicated to maximizing profit (i.e. maximizing the production of goods), so if the government is taking money away from the market through taxes, and spending that money on whatever project appears to create the most jobs, clearly 'profit' is not the government's highest priority.
Here we invest into an infrastructure, to end up with something better you can make better business with.
Sometimes spending on infrastructure is the most efficient way to use resources, and sometimes it's not. How do you know what you should do? You just have to figure out the course of action that is the most likely to maximize profits (not jobs). However, if you can't calculate profit and loss because the government has partially or fully nationalized the industry, then you will run into the economic calculation problem.
Slashdot Mirror
I think we'll have to agree to disagree, but I hoped you would get more out of that paper than just "Occam's Razor". Here are the points, about the differences between physics and economics, that I found important:
...But this is something fundamentally different from the constants of physics. It is the assertion of a historical fact, not of a constant that can be resorted to in attempts to predict future events."
"The economist starts with a knowledge of ultimate causes. He is already, at the outset of his enterprise in the position which the physicist only attains after ages of laborious research...."
"In physics the axioms and therefore the deductions are in themselves purely formal and only acquire meaning "operationally" insofar as they can explain and predict given facts. On the contrary, in praxeology, in the analysis of human action, the axioms themselves are known to be true and meaningful. As a result, each verbal step-by-step deduction is also true and meaningful; for it is the great quality of verbal propositions that each one is meaningful, whereas mathematical symbols are not meaningful in themselves."
"[The econometrician] cannot help admitting that there are no "behavior constants." Nonetheless, he wants to introduce some numbers, arbitrarily chosen on the basis of historical fact, as "unknown behavior constants." The sole excuse he advances is that his hypotheses are "saying only that these unknown numbers remain reasonably constant through a period of years."
"The highly praised equations are, insofar as they apply to the future, merely equations in which all quantities are unknown."
"In the mathematical treatment of physics the distinction between constants and variables makes sense; it is essential in every instance of technological computation. In economics there are no constant relations between various magnitudes. Consequently all ascertainable data are variables, or what amounts to the same thing, historical data. The mathematical economists reiterate that the plight of mathematical economics consists in the fact that there are a great number of variables. The truth is that there are only variables and no constants. It is pointless to talk of variables where there are no invariables."
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?
The best solution is to reduce our foot-print as rapidly as we can.
Is it safe to do that without a full understanding of the dynamics? Or does that argument only apply to your opponents?
Multi-threading is hard when your threads share memory with each other. At first, it seems easy enough, but as your program becomes more complicated, you'll have to use more mutexes. The more mutexes you have, the more likely it is that you will run into dead-lock. And even after your program is working, you'll be afraid to modify certain parts of it, because you know that one wrong move could lead to a race condition or a dead lock.
So, what's the solution? In my opinion, whenever you're writing a complicated, multi-threaded program, you need to use the actor pattern. In other words, instead of sharing memory, have your threads (i.e. actors) send messages to each other. Suddenly, everything is pretty simple. You don't have to worry about dead-lock anymore. You don't have to worry that some other thread is going to mess with one of your structures. For me, the actor pattern was a life-saver.
Sure, I still share memory here and there, but whenever the program threatens to get away from me, I use the actor pattern to drive away the complexity.
It retards the progression of democracy and social justice abroad and creates future demand for corruption.
I disagree that all bribery is bad. As Murray Rothbard writes:
"What of bribery of government officials? Here a distinction must be made between "aggressive" and "defensive" bribery; the first should be considered improper and aggressive, whereas the latter should be considered proper and legitimate. Consider a typical "aggressive bribe": a Mafia leader bribes police officials to exclude other, competing operators of gambling casinos from a certain territorial area. Here, the Mafioso acts in collaboration with the government to coerce competing gambling proprietors. The Mafioso is, in this case, an initiator, and accessory, to governmental aggression against his competitors. On the other hand, a "defensive bribe" has a radically different moral status. In such a case, for example, Robinson, seeing that gambling casinos are outlawed in a certain area, bribes policemen to allow his casino to operate - a perfectly legitimate response to an unfortunate situation."
"Defensive bribery, in fact, performs an important social function throughout the world. For, in many countries, business could not be transacted at all without the lubricant of bribery; in this way crippling and destructive regulations and exactions can be avoided. A "corrupt government," then, is not necessarily a bad thing; compared to an "incorruptible government" whose officials enforce the laws with great severity, "corruption" can at least allow a partial flowering of voluntary transactions and actions in a society."
The State versus Liberty
Why would companies replace systems that are working well?
The question is not, 'Does the code work?', the question is, 'Does the code follow good design principles?' If the answer is 'No, the code is not well-designed', then maintenance can be very costly. I like the snippet from this page:
"I was once told by an instructor in a design patterns class that the Y2K problem wasn't caused by using 2 digits to represent 4. Instead, it was caused by doing so all over the place. While the reality of the situation is a little more complicated than that, the principle is true. If the date handling code had been all in one place, a single change would have fixed the whole codebase rather than having to pull tons of Cobol coders out of retirement to fix all the business applications."
The old Western Union trick
I have a friend who fell for this scam. How did he fall for it? Well, even though he was suspicious of the check that he received from the scammer, his bank told him the check had cleared, and he saw that the money had been added to his account. So, he assumed everything was on the up and up. But a few days later, the bank said the check had bounced, and they froze my friend's account.
Now, why do banks add money to their customers' accounts before everything has been fully validated? Turns out the government is at it again:
"Banks are required to make funds available to customers within a few days of when the check is deposited -- even if the check has yet to clear. This law was enacted in the 1980s after consumers complained that banks were holding onto deposits for inordinate amounts of time. The law has, indeed, allowed consumers to access their money more quickly. But it's also provided another avenue for fraud." -- Con artists take advantage of check rules
you are basically saying a person has the same latitude to defend against loud music as they do physical assaults!
Extremely loud music is a type of physical assault. But that does not mean all assaults should be treated as equal. I, like most people, would much rather deal with loud music than, say, a punch to the face. So if I go over and punch my neighbor in the face, then I will have turned into the aggressor.
But, let's say I go over there and politely ask him to turn the music down and he refuses. In that case, I am certainly entitled to turn his radio down for him. If he tries to stop me, then he has become the aggressor. I am allowed to use the necessary force to end his aggression.
What if the "aggressor" won't turn down his radio, and I choose to either deck him or have the private police force do it
Come on. What would happen if a "normal" police officer asked some people to turn down their radio, and they told him "No"? Would he just shrug his shoulders and say, "Well, I tried"? No, he would tell them that if they don't turn down the radio, he's going to escalate the amount of force he is using. If they escalate in response, then he will keep escalating until the situation is under control. In a libertarian society, a normal person is entitled to do this, although I'm sure most people will choose to hire the services of a private police force. No matter who knocks on the door, the rules are the same. Is that so absurd?
One thing I want to add to my previous comment: If you did hire a private police officer to intervene on your behalf, then that officer would be liable if the court ruled in your neighbor's favor. In a libertarian society, saying "He paid me to do it" is not a valid defense. You would only be liable to the extent that you aided the officer. In other words, if the court rules that the officer was acting as an aggressor when he physically stopped the neighbor from playing the music, then you might be guilty of the lesser offense of 'aiding a criminal'.
For example, under current law, a police officer can come and disperse a noisy party after 11PM in many neighborhoods. If it were merely a contract, you'd have to suit to get the party to disperse. Is this what you envision?
In a libertarian/anarcho-capitalist society, if a neighbor is playing music that is loud enough to qualify as a nuisance, then they are aggressing against you. You have a right to stop that aggression yourself, or to hire a private police force to do so on your behalf. You do not need permission from a court. It is not until one of the parties involved files a lawsuit that the court will decide who was right and who was wrong. That decision will be based on who aggressed against who. The court may decide that you were the one aggressing against your neighbor, because you were unable to provide enough evidence that your neighbor was playing loud music (hopefully the private police officer will back you up with his testimony).
Of course, in a libertarian society, even if a court ruled against you, that would not prompt a government agency to arrest you. However, if the general public considers the court's opinion to be credible, then you will be ignoring that ruling at your peril.
Holding on to that, the only thing that separates the two goods must rely on scarcity? (supply and demand) to set the price
Price is always determined by supply and demand; cost is irrelevant. If I try to sell you a house, do you care about how much money I spent fixing it up? No, you only care about the end product.
I am really curious as to how you can justify person A being paid more than person B...?
Because the market is not a meritocracy. Consumers do not pay producers for working hard, for being highly educated, etc. Consumers pay producers because they value the end product. Often times, the market will look like a meritocracy, because hard work tends to result in more productivity. But it is consumers who decide winners and losers.
My point is that if you want to run a business that is as profitable as possible, then you should try to pay employees according to how much productivity they add to the company. In other words, if the employee was actually a third-party vendor, how much would you pay them for their product?
To the extent that you rely on silly rules (e.g. I won't pay Joe more than 7 times what I pay Bob) instead of relying on the market's method of valuation, you will be giving your employees the wrong incentives. That eventually leads to less than optimal productivity for your company as a whole, which hurts your bottom line. And a lower bottom line means that consumers are telling you, through their actions, that they do not value your end product as much. That's not a good thing, IMHO.
...a policy where no person could make more than seven times as much money as any other person in the company.
Imagine two goods, good A and good B, that are sold on the open market. Good A sells for a price that is eight times greater than good B. Person A was able to produce good A in one day, and person B was able to produce good B in one day. So, on the open market, person A makes eight times more money than person B in the same period of time. That means consumers have judged person A to be eight times more productive than person B, even if person B worked much harder!
So, if person A and person B happen to be working for the same company, why shouldn't their boss pay person A eight times more than person B? Why should their boss come up with some arbitrary limit?
Again, this assumes an equitable distribution of wealth between those who value a given piece of land as a preserve and those who might choose to mine it for something else.
No, it doesn't. Those who have more wealth will have a greater say about the existing wealth. It's not a democracy. Everyone is not equal. Some people are more productive than others, and in a free market, the most productive people (and those who inherit from the most productive people) will have the most say. This is not a distortion or flaw; rather, I am simply stating that those who create wealth, get to control wealth. Those who inherit wealth only do so because a wealth creator chose them as his beneficiary.
And again, since in the short term it's possible for those who value it only for the wealth they can extract from it to make more money than those who may have preservation in mind, those people are quite likely to have more money.
The wealth someone can 'extract' from a property is not set in stone; rather, the ways they can make money from a piece of land depend on what other people are willing to pay for. Saying that someone values land only for the wealth they can extract from it is just another way of saying that person is unselfish; he or she does not care about their own desires, but rather, they only concern themselves with the desires of their customers.
The owner is, of course, entitled to decide if he values (as an example) $500 today more than the possibility of $1000 in a week. Just because he chooses the short term, that does not mean his choice was 'wrong'. Consumers can also choose between their short term and long term desires, and there is no right answer.
Which is another way of saying that all real value is monetary value -- a highly dubious proposition.
I'm saying all values can be expressed through action. If a man hands over five dollars in exchange for a good, then his actions indicate that he values that good more than the five dollars. If that was not the case, then he would have kept the five dollars in his pocket. How can his actions not reflect his 'real values'?
Given this equation, individuals willing to prioritize more profitable uses will naturally become more wealthy than owners who aren't... which leads to the other kind of problem I pointed out.
What's the problem? If using land in a particular way brings in millions of dollars, and using it in an alternative way brings in very little money, then consumers are saying, with their money, that they would rather see the land used in the former way. If people really value a preserve, then they should be prepared to pay for it. The market does not care what you say -- it only cares what you do.
Suppose, for example, that a man claims that a preservation is just as important to him as gasoline. If, however, he spend hundreds of dollars a year on gasoline, and he only spends a small amount of money on preservation fees, then his actions do not match his words. The market responds to his actions, just as it should.
Now, you might be saying, "He only spends a small amount of money on preservation fees, because the fees are low."
However, fees, just like any other price, are not set arbitrarily.
The preservation owner has the option of charging what the market will bear. If the preservation owner does not charge what the market will bear, then he has only himself to blame for not being wealthy. If the owner does charge what the market will bear, but that results in very small fees, then that must be because consumers are only willing to pay small fees. Once again, if consumers truly consider preservation to be important, then they back up their words with their money.
Deregulation is fine if you are willing to accept a very unstable economy.
Actually, fractional reserve banking is what makes an economy unstable. But, so long as people are foolish enough to believe that creating money somehow helps the economy, we'll continue to have business cycles.
We had lassiez-faire prior to the 1930's, and along with that 7 depressions in a 50 year period, including the Great Depression and the Long Depression.
Nothing on the scale of the Great Depression ever happened before the Federal Reserve.
Also, unlike modern day recessions, prices actually fell during the recessions of the pre-Fed era. Sure, people had to deal with increased unemployment, but at least a single dollar could buy more goods. Nothing quite like the stagflation of the 70's, where people had to deal with increasing unemployment and sky-rocketing inflation at the same time, happened before the Federal Reserve. Not exactly a record to write home about.
If we flash forward to the current economic situation it is pretty clear that the proximate cause was the relaxation of reserve requirements for investment banks by the SEC in 2004.
Before central banks, there was no need for 'reserve requirements', because competition between the banks forced them to have higher reserve ratios. If bank A owed money to bank B, the debt had to be settled in gold. Therefore, any bank that did not have reserves on hand would quickly become insolvent.
It was only when the central bank removed all of the natural, free market checks on credit expansion, that reserve requirements were introduced to keep reserves from dwindling to nothing. Thus, the relaxation of reserve requirements is not a true move towards freedom, or deregulation. It is merely the government increasing the original distortion that was unleashed on the market when fractional reserve banks were freed from competition.
What happens when there is too much inventory because of extremely low consumption and thus too much investment. How does more investment help?
In economics, there can never be a such thing as 'too much inventory'. In fact, the entire point of all economic action is to create as many goods as possible. Sellers merely need to lower the prices of their goods in order to get their inventory to move. Yes, the sellers may end up selling at a loss and going out of business, but that is how the market corrects itself. The error during the boom was that businesses bid costs up too high, diverting production into lines that turned out to be unprofitable. Now, those prices must fall, so that production will be diverted back into profitable areas.
Investment is the key, because consumption can not happen without investment. If we invest more today, we will have more goods to consume tomorrow. It's that simple.
The misunderstanding that most observers have comes from being focused on adjusting the consumer to meet the needs of businesses. Obviously, businesses want consumption: The home builders want more home consumption, the oil companies want more oil consumption, etc. However, the point of the economy is for businesses to adjust to the needs of consumers. The fact that a lot of businesses are closing, and a lot of employees are being laid off, merely tells us that a lot of mistakes were made during the boom, and now a major adjustment is necessary. The best thing to do is to allow that adjustment to take place. If we continue to fight the adjustment, we'll only have less production and become more impoverished.
Their product is free, and does not prevent competitors from entering the market.
The same could be said about IE. If Microsoft bundled Firefox instead of IE, what would the difference be, from an anti-trust point of view?
But since the financial sector isn't working, so if someone saves, the bank just sits on the money and it disappears.
"Hoarding" is never a problem. Let me explain: When someone receives income, there are three ways he can allocate it: Consumption, investment, or addition to his cash balance. Of course, an addition to his cash balance usually means depositing the money in a bank, but that changes nothing; it merely means that the bank will be presented with those same three choices.
Now, if everyone chooses to add more money to their cash balance, then that increases the demand for money, which causes wages and prices to go down. However, an increased demand for money has nothing to do with the consumption-to-investment ratio. An increased demand for money simply means that people are more willing to do without goods in exchange for money (because they want the protection against uncertainty that money provides). But the demand for money tells us nothing about how much people prefer consumption to investment, and that's what is really important.
The more that people are willing to invest, the greater our productivity will be. However, the only way to increase investment is to decrease consumption. The last thing we want to do right now is to encourage consumption; that's why the government's stimulus plan is such a bad idea.
I don't know why this is so hard for people to understand. For some reason, they think that consumption drives the economy. Well, if you found yourself on a deserted island, what would you do? You'd invest as much as possible (e.g. spend time building a raft), and consume whatever fruit and fish you find as slowly as possible, so that your resources would last.
But in the modern economy, people think we should just consume, consume, consume, so that no companies will go out of business. Well, guess what? Businesses are supposed to adapt to consumers, not the other way around! If there is less consumption in certain areas, then businesses should shift out of those areas and into the areas where they can prosper. And it's not as though a decrease in consumption means less people will be employed; businesses can always hire more people by expanding the stages of production (that's where the increased investment comes in). People think that decreased consumption means the end of the world! The reality is that a decrease in consumption is what allows the economy to grow.
The broken window fallacy assumes that resources are fully employed.
The argument from idle resources, huh? Here's a great article about it: Does "Depression Economics" Change the Rules?
Regardless of your political leanings, when it comes to debunking media distortions Media Matters rules!
Regardless of your political leanings? They say in their 'About Us' page that they're only interested in misinformation that forwards the conservative agenda. That's a shame. Why not correct misinformation from all sides?
...there are no damages for copyright infringement...
What about the fact that you lost control of your property? For example, suppose that you were away from your house. When you return, I tell you that I borrowed your car, took it out for a spin, and then returned your car in its original state (assume that's possible -- forget wear and tear). You wouldn't say, "You're right. I still have my original property in its original state. I haven't lost anything." No, you would say that you have the right to control how your property is used at all times.
So, if I write a book and keep it in my house, then no one can make a copy of it without violating my property rights. I could make a copy of that book, and then sell it to a consumer on the condition that they don't make any unauthorized copies of it. Perhaps I would say that I am merely leasing my property to them indefinitely, and granting them all rights (except for the right to make copies), but it's still technically my property. In that case, any unauthorized copies that surfaced would be evidence that someone, somewhere, must have either broken their contract with me, or stole my property from the person I leased it to. My damages are the fact that I've lost control of my property (i.e. the original book and the copies of it that I sold).
Would you agree with me that my property rights have been violated in the above scenario? Would you also agree that I should be compensated in some way for every unauthorized copy, since the unauthorized copies are clearly unjust enrichment?
If you want to argue WW2 pulled the US out of the Depression, then you're just saying the New Deal was too small.
I would argue that both the New Deal and WW2 were very bad for the economy. As an example: From 1923 to 1929, the square feet of office space in Chicago almost doubled. From 1931 to 1950, no new office buildings were erected and no new large hotel was built in Chicago. But I guess we did kill a lot of people and destroy a lot of buildings.
So, yes, WW2 "saved" us, in the same way that a broken window saves a glazier. But what if there had been no New Deal, and no second world war? Perhaps we might have had a real economic recovery during those years...
But when we're at the peak of a crisis, don't we indeed need a temporary relief to distribute the impact in time, so that we don't pay the full price now but pay some of it when we'll be a bit better off, economically?
What you have to understand is that there is just one pool of resources. We depend on that pool of resources to grow the economy. Every time the government pulls resources from that pool for the purpose of "relief" (i.e. consumption), we have fewer resources for growing the economy (i.e. investment).
For example, let's suppose that you lost your job. In order to give yourself more time, you start depending on credit cards. That strategy has a chance of paying off because you a relying on someone else's savings (i.e. the credit card company). But what if you couldn't rely on someone else's savings?
Suppose you were a restaurant owner, and you were running out of money. In order to save on your heating bill, you could burn all of your tables and chairs in the fireplace, telling yourself, "I'll buy more tables and chairs when I'm in a better position to afford them." The problem is, now your customers don't have anywhere to sit, so they don't come anymore. You tried to consume your own savings to give yourself some time, but you hurt your business by doing so, which means it will take even longer for you to get back on your feet.
Similarly, the government slows down the economy's recovery every time it tries to give people "relief". As mattwarden explained, the government's so-called investment is really just consumption (or "relief") disguised as an investment. Yes, it's better to pay people to build roads than to do nothing, but that doesn't mean resources are being used as efficiently as possible.
It's no broken window fallacy. In the broken fallacy nothing is gained from breaking the window and replacing it.
I agree. No wealth is being destroyed here.
Instead, the fallacy here is that people are focused on creating jobs, rather than wealth. The point of all economic activity is to allocate resources in order to create wealth (i.e. goods) -- not to create jobs. When someone says they want a job, what they are really saying is they want an income which they can use to purchase goods. Thus, the scarcity of paying jobs is the result of the scarcity of goods.
So, the government can certainly create jobs, but that is pointless if the job creation scheme results in a greater scarcity of goods than we would otherwise have. The market is already dedicated to maximizing profit (i.e. maximizing the production of goods), so if the government is taking money away from the market through taxes, and spending that money on whatever project appears to create the most jobs, clearly 'profit' is not the government's highest priority.
Here we invest into an infrastructure, to end up with something better you can make better business with.
Sometimes spending on infrastructure is the most efficient way to use resources, and sometimes it's not. How do you know what you should do? You just have to figure out the course of action that is the most likely to maximize profits (not jobs). However, if you can't calculate profit and loss because the government has partially or fully nationalized the industry, then you will run into the economic calculation problem.