Ludwig von Mises warned of the unintended consequences that result from government interventions. In line with his warnings is the misallocation resulting from malinvestment by government in activities that are not the best use of scarce resources. These malinvestments create capital structures unsupported by real wants and desires. Bust comes when resources are cutoff or shift to the lines that are truly productive from those lines which exist solely because of these government interventions.
How in the world does this relate to reading? The answer is quite simple and telling, and it’s also an excellent lesson in Austrian Economics.At the same time that Teach Your Child to Read in 100 Easy Lessons by Siegfried Engelmann, Phyllis Haddox, Elaine Bruner, is currently available on Amazon.com for $8.14, the federal and state governments are wasting hundreds of millions, if not billions, on Progressive reading strategies that are of little use, and are potentially harmful. In addition, local public schools are spending untold tax dollars implementing these strategies, leaving many children semi-literate at best.
Go to Amazon.com and search for 100 Easy Lessons, then sort the customer responses in reverse order of ranking – lowest to highest – to see the objections to the above reading program. You will find that the objections typically suggest another book or series of books that are themselves reasonably priced and readily available. None of the comments I read said that 100 Easy Lessons fails to teach reading. And, neither this program nor suggested alternatives rely on continual government resources for R&D. They are programs that are tried and true, successful yet cheap, products of the free market.
The result of the government expenditures in reading is a capital structure that is nonproductive and wasteful, but is also a dollar-consuming Leviathan. A significant portion of the funding received by these programs and departments goes back into continual lobbying and PR expenditures. As a result, the programs and departments, along with their sycophant lobbyists and PR pushers, grow and grow; a financial Backdraft that consumes tax-dollars and lays waste to the dreams of future generations.
Government has to fear the bust that will inevitably occur when funding ends for these programs and departments. The result will not just be thousands upon thousands of bureaucrats, administrators, and teachers hitting the street. The result will include the loss of capital invested in private enterprises that exist solely to remedy the ills caused by the government-funded reading programs.
Should the products of the private sector – Teach Your Child to Read in 100 Easy Lessons, etc – replace those created by interventionist policies, you will save tax dollars while student achievement rises[1]. Just be ready to ignore the administrator or teacher holding the cup and the sign that reads, “Will whole-language for food.”
Notes:
[1] Of course, privatizing both schools and school funding is the real solutions.
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rtr,
Kevin B: ‘The word “invest” is not a synonym for “trade.’
rtr: “It is a synonym for trade…”
God, I’m using the dictionary. You are arguing with the dictionary.
Kevin B.: “mal·in·vest·ment
–noun
1. the investing of money or capital which fails to yield profitable returns, as interest, income, or appreciation in value.”
rtr: ‘”Appreciation” in value? Measured against *what*? As in something is valued in the future more than it was valued in the past, by you, or by others?’
I was using the definition that *YOU* took from the dictionary. I suppose I may have doubted your definition of “investment.” Let’s be all be silly:
rtr: “in·vest·ment
–noun
1. the investing of money or capital in order to gain profitable returns, as interest, income, or appreciation in value.”
Appreciation in value? Measured against *what*? As in something is valued in the future more than it was valued in the past, by you, or by others?…
“In case you want to know, he went that way.”
“Who did?”
“The white rabbit.”
“He did?!”
“He did what?”
“Went that way.”
“Who did?”
“The white rabbit.”
“What rabbit?”
“But didn’t you just say…oh bother!”
You can’t invest something except by trading something else for that investment, or by trading the possible uses of the investment for a particular use of the investment. That is so at every moment in time the investment is held. Why do you think on-line brokerages call the executions of “investment” orders “trades”? There are buyers and sellers of investments. There are differing possible employments for investments, some which are chosen, and others which are forsaken. A purchase, a transaction, a lease, investments, etc. are all trades.
The definition in the dictionary was a references, which was called for by Tom Rapheal. It wasn’t written by me. It’s subject to criticism and analysis.
Hi, Kevin.
Does this mean that you, too, are growing tired of trying to reason with the unreasonable? Good grief, I’d rather go argue copyright/patents with Sasha at this point.
rtr, I asked you a question and what I got in return was pure cheek, not worthy of further response. I’m done with you.
You made some wild undemonstrated claimed assumption Scott D:, “When government artificially lowers interest rates, what we get is controlled chaos”, without ever showing it. I’ve answered the questions and examples which were directed to me, and pulled two new N.P.s from them.
If it is impossible to malinvest, it is impossible for there to be a malinvestment. Q.E.D.
Scott D: “Does this mean that you, too, are growing tired of trying to reason with the unreasonable?”
The irony. You, and all defenders of the ABCT are resoundly defeated. For if you make your claim of “malinvestment”, likewise the absurd claim that Sony producing more plasma televisions causes “malconsumption” must also be granted.
Scott,
I agree that it seems pointless when your opponent argues with dictionary definitions of words. How are you supposed to interpret what he is saying when he redefines words themselves?
…And that’s why I get Nobel Prize #1,536 – because I *proved* that the English language is a praxeological impossibility!
I couldn’t resist the more subjectively valuable comment, rtr.
rtr,
According to Mises Made Easier:
Malinvestment is a reflective term that states, “Whoops, I made a previous error in forecasting since my capital structure is not in-line with consumer demands.”
Malinvestment is not an action, nor the result of an action. It is simply a subjective view of past decisions, though it is based on a real appraisal of the world versus a past expectation.
Yes, there is malinvestment. rtr can create a different definition but he should coin a new term or phrase. In this blog, the convention for words has been established in Mises Made Easier – an option on the Resources/Classroom tab.
As I understand it, the Federal Reserve increases the money supply by making more money available to banks to lend out. This extra money thus reduces the interest rates for loaning this money out, a rate that is thus lower than the true, market-based rate that would come about simply from people’s savings based upon their time preferences.
Businesses get the signal from the lower interest rates that not only is there more money available, but that people have higher time preferences and are saving more money, and thus are willing to support increased production by business.
That’s the lie, however, because not only are people not saving more money, but the money they do have has been devalued by the Fed’s inflationary process. Businesses are being misled into thinking that consumers are willing and able to support increased production when they are not. That is the cause of malinvestment. Without the Fed’s inflationary interference, the interest rates would more closely reflect the amount of increased production that consumers are willing and able to support.
The fraud is in the interest rates. Any exchange based upon fraud is not voluntary. Malinvestment, then, is investment based upon the fraudulent interest rates caused by the Fed. Of course, even if the interest rates weren’t being tampered with, businessmen could still make mistakes and try to increase production more than is warranted by the rates. That would be bad investments of a different kind, though, not necessarily “malinvestment” as Austrians are talking about.
Alas, I don’t think they give Nobel Prizes for simply restating what other people have said…
Well, well, well, as you *don’t* understand it. But here’s a balloon for you to play with.
As *I* understandebly display it, you, as they colloquially say in the 21st century, “suk”.
And as “y’all” understand it, from some kindergarten knockoff spelling site, it spells P.,A.,T.,H.,E.,T.,I.,C..
Please “conference” while you come to this determination a postieri, or whatever post apology you come up with, especially those who remained silent, out of respect for their *better*.
I mean, really, do you want me to drag them through face first through the disproof carwash?
Michael A. Clem: “Alas, I don’t think they give Nobel Prizes for simply restating what other people have said…”
What iz this, EZ Nobel Prize #3 or #4, you mock? I *already* put down everything on stringing youz through the “lose”/”loose”.
I mean Jesus H., “Austrians” talking about “The True interest rate”?
Don’t make me laugh, even more than ….
Increased supply of something, not *even* ceteris paribus, reduces interest rates…
They supposedly don’t get the “signal” when government “changes” supply, because they are “S”.,”T”.,”U”.,”P”.,”I”.,”D.”. That’s the *truth*. I mean, is there is an ethical dilemma regarding humiliation? Fine, have it *Lorded* over your dumb a$$es. With subjective pleasure.
Michael “‘A’ still working on ‘B’” Claim: “An exchange based upon fraud is not “voluntary” because the wannabee Austrian ‘torchbearers’. What’s next, being charged with a crime for picking up a loose fiat note on the street?
Michael A. Clem: “Malinvestment, then, is investment based upon the fraudulent interest rates caused by the Fed.”
Just blow crap as much as you can, “an exchange based upon fraud is not an exchange”, no duh, dummy.
Persecution complex much? Any and every change in supply (not to even mention post subjective valuations of how weak your analyses are), are “confusing” if they are “caused” by “government”?
Fine, let everyone observe with extra smearing on top. It does not get any more uncivil than a failure of acknowledgement of truth.
Michael A. Clem: “Of course, even if the interest rates weren’t being tampered with, businessmen could still make mistakes and try to increase production more than is warranted by the rates. That would be bad investments of a different kind, though, not necessarily “malinvestment” as Austrians are talking about.”
Is that the “Gospel”, according to your dumb a$$?
Michael A. Clem: “Alas, I don’t think they give Nobel Prizes for simply restating what other people have said…”
Alas, I believe I feel your subjective humiliation. But, dude, set me up again, I luv high lobs at the net …
Cents and Sense: “Malinvestment is not an action, nor the result of an action. It is simply a subjective view of past decisions.” Yes, there is malinvestment, the friendly ghost.
Cents and Sense: “rtr can create a different definition but he should coin a new term or phrase.”
I *can*, can’t I? So be it. “Malinvestment” is the result of “Santa Claus”, “the Tooth Fairy”, the st00pid, the arrogantly stupid that *lost* debates*, the you fools.
“Malinvestment is not an action … because I’m too stupid to know what action is ..”
Or maybe you should just bow down, already. Isn’t it great? It’s already “coined”. rtr can praxelogically prove your full of civilly defined “nonsense”, from multiple points of reference.
Cents and Sense: “In this blog, the convention for words has been established in Mises Made Easier – an option on the Resources/Classroom tab.”
Mises dot blog, pwned by Chicago Skewl, co-opted by Chicago Skewl, but neigh said the little fish. Bunch of posers running for Austrian “Bishop”.
/wave
rtr + > you
Alas, I get to humiliate y’all again and again. Gimme your tired disinterested pride. I need a new award.
rtr,
I award you the Mises Weblog Malinvestment Award.
Congratulations.
rtr Please argue, don’t dismiss. Maybe you are the greatest thing since sliced bread, but you sure have confusing logic and explanations. Especially when you say, if you can’t malinvest then there is no such thing as a malinvestment, without showing the logical error in my reasoning. (I INVEST in a stock. The the stock price goes down. I REGARD it as a MALINVESTMENT.)
rtr, it seem that once again, if we use your praxeological commitments, we see this:
Trade, voluntary exchange, is an agreement, to exchange this for that.
And we may replay, insofar as this relates to individual actors: True. Insofar as this relates to interpersonal exchange: False.
Now, I said:
To which you responded:
I say, again, the voluntary agreement never happened, you are presupposing this with your answer. Adam valued looking at the apple more than not. Betty valued having the apples there with a sign more than not. Adam valued putting money on the counter more than not. Betty valued handing an apple to Adam more than not. This just happens to be one of the most common coincidences in human action, which we call “trade” for convenience (but would be foolish to think actually exists).
So, if I may borrow some words, modified a bit, for a moment:
“And therefore we see the key to the error of the false definition of ‘trade’. It attempts to assign an objective praxeological purpose to an inherently subjectively valued thing. People value what they value because of what and how that value enhances their subjective value of their own actions.
“All actions, all subjectively valued things, are means to means, both closer and further, of both oneself and others.”
That’s a great praxeological critique of this vague notion of “trade.” If you were a little more consistent in your application of praxeology, rtr, you’d have NP#13 by now. There is no such thing as interpersonal trade, only human action.
You say: No matter where you were to put an arbitrary pause on human action, you would still only find means being traded for different means.
And I completely agree, insofar as we use your praxeology. It completely fails to give us even an understanding of interpersonal exchange. Your critique of money is that it essentially reifies a non-existing thing; I see the same critique applying to trade.
I guess you can consider that a challenge to show how interpersonal exchange exists given your methodology. I can explain everything you’ve described as “trade” sufficiently using only human (singular) action. So far you haven’t given me a reason to think interpersonal trade actually exists — just that it’s a very common form of human action.
If I can speak for a moment outside of the rtr box that I’ve confined myself to, I want to comment that I think that money is defensible, even on the grounds that rtr is critiquing it.
This can shown when we make the praxeological observation that people in an economically developing society prefer a more direct route to many goods through one medium rather than trading eggs for butter for meat for nails for a fishing hook. This medium, which is historically gold, is called ‘money’, but does not exclude the use of other media for exchange. Nevertheless, we can make useful observations about it in the same way that we observe other economic phenomena that aren’t restricted to a one-time exchange of this action or inaction instead of that action or inaction. The very nature of having ends suggests that not every action is the end in itself of a person’s intentions.
rtr, your counter-argument seems to be two-fold. On the one hand, you point out there there doesn’t exist a medium of exchange, only exchanges. I think this is flawed for the reasons I am citing in other posts above. I don’t see a compelling argument that we should stop praxeological analysis at eggs for gold, and not see that an actor’s intent was eggs for gold for X, where X is any range of goods (made possible by gold’s convenience as a medium of exchange). The other problems are in other posts.
Secondly, you point out that anything can be used in the same way that what we call “money” is used (e.g., plasma TVs). I don’t think this is compelling because no Austrian has ever said that gold by its nature excludes anything else being used in an exchange. I might sing for a mansion, or trade water for apples. I see no contradiction.
Tom Rapheal: “Especially when you say, if you can’t malinvest then there is no such thing as a malinvestment, without showing the logical error in my reasoning. (I INVEST in a stock. The the stock price goes down. I REGARD it as a MALINVESTMENT.)”
You can *never* in the present tense “malinvest”, by definition of trade and by definition of action. By definition, at the moment you invest, you have already booked a profit, in the strict economic sense. You are better off with the investment than without the investment, than for some other use of your scarce resources. Thus, no voluntary trade can ever result in a “malinvestment” at the moment of trade. Both parties are by definition better off, wealthier from the trade. This is true, no matter what is voluntarily traded for, even if it’s fiat dollars (when they are being voluntarily exhanged). Economics doesn’t cease to apply to criminals when they too trade their ill gotten booty.
Thus, correct economic science, the true explanation, says there is no malinvestment or misinformation generated by a change in “money” supply, any more than there is no malinvestment or misinformation generated by a change in supply in absolutely any other good or service as well.
Thus, it is praxelogically incorrect to label something an action, or the result of an action, which can never occur at the moment of action. If an action can never occur, that action can never exist. Since it is a praxelogical impossibility to malinvest, malinvestment is also a praxelogical impossibility. Now subjective valuations of investments can certainly change. Investments may be undertaken with hoped for positive future subjective valuation changes. But those expected future subjective value changes will be presently valued with more or less consciousness, with more or less accuracy. But it is impossible to know how future subjective valuations will change, by definition of omniscience not existing, by definition of subjective valuations being in constant changing flux.
Not only is it impossible for governments to plan with certainty, it is also impossible for individuals to plan with certainty. That’s why voluntary exchange maximizes efficiency, sends signals for more of this, less of that. Only free exchange sends these signals.
It is impossible to not make mistakes, it is impossible to know future changing subjective valuations with certainty. If one were to judge action according to the standard of perfection correlation to the future, every action would be a “malaction”, would be “wrong”. And that would be in contradiction to the definition of action itself. People acting are by definition increasing their subjective material wealth. That’s true whether it’s choices to do something or whether it’s choices to not do that something. Just because you do something at an earlier time and value that thing you did in an earlier time less in the future, does not qualify that past action at the time of that action. Past action can never be a malaction; otherwise it wouldn’t have occurred. Regret is a new action at the new time of the new action. As such, an “investment” is being undertaken or not undertaken at every moment in time. You cannot, under any circumstances, do so in a mal manner, when you are voluntarily doing so.
Thus, you pay to see a movie, and you don’t like the movie. If you leave early before the movie is finished, you value doing something else more than continuing to watch what you regard as a bad movie. And you might regard it as a bad movie, and continue to sit through it anyway, for whatever subjective valuation reasons, such as consideration for the person you went to see the movie with. Same with investments. You might value trading your investment for something else. Market subjective valuation changing price signals might well inform you the market wants less of this through lower price subjective valuations. And if you sell (at a loss), you are still booking some economic profit from that action of selling at that moment of selling.
Thus, we conclude using the term “malinvestment” is quite like using the term “equilibrium”. They do not correspond to reality. No malinvestment results from government interference changing the money supply any more than it does from any individual interference chainging the supply of any good or service, when what is being traded is being voluntarily traded for. Of course, violence causes poverty. Of course, violence preventing competition with the government fiat currency causes poverty as well. But nobody accepts anything, including fiat currency notes, unless by definition they are better off doing so.
So the pinacle of Austrian achievment, in some minds, the ABCT, is destroyed. So sorry.
DC: “I say, again, the voluntary agreement never happened, you are presupposing this with your answer.”
It’s presupposed in the willingness, the expressed action willingness, of two parties to trade this for that. Putting a for sale at price X announcement in some form means person B, the apple seller, is willing to trade the apple for X. Likewise, person A is willing to trade X for an apple.
Now you may be correct that in a strict praxelogical sense of time, the exchange of an apple for X dollars does not occur simultaneously. A may fork over the dollars first, and B may fork over the apple second. But this is not a problem, because lots of exchange involves future delivery, the promise of future delivery. In that sense, people are voluntarily willing to trade for promises. They do it all the time. That’s why I was saying concepts like risk, reputation, credit, exist.
DC: “Adam valued looking at the apple more than not. Betty valued having the apples there with a sign more than not. Adam valued putting money on the counter more than not. Betty valued handing an apple to Adam more than not. This just happens to be one of the most common coincidences in human action, which we call “trade” for convenience (but would be foolish to think actually exists).”
All true. Trade is a type of action which occurs, which exists, both personally and inter-personally. I don’t see how you arrive at:
DC: “Insofar as this relates to interpersonal exchange: False.”
Exchange occurs. People do indeed trade this for that. Possession and Ownership of subjectively valued scarce things voluntarily occurs. The concept of trade explains why that exchange occurs, because what is received is valued more than what is given away in exchange. Exchange includes risk and credit, with more or less consciousness. Trade is a defined praxelogical action. Nobody maltrades, *by definition*. Likewise, nobody “malinvests”. This is necessarily either/or. You trade because it increases subjective value. You invest because it increases subjective value.
Thus, here is N.P. #13: even decreasing subjective valuation only occurs because people are by definition informing themselves of what is more or less profitable. You sample some super hot sauce. You don’t like that hot sauce so you stop sampling that hot sauce. And you continue to not sample that hot sauce, because you are subjectively more wealthy not sampling that hot sauce. Is it not more profitable to know what you want *and* what you don’t want?! Thus profit on a net societal level (as well as individually) is garnered by the signals which say to cease waste, to cease production, to cease effort, which are sent from the likes of your no longer purchasing that hot sauce, subjective valuation declines. You’re better off doing something else, or at least better off taking a break from doing what you were doing. Thus, free trade sends profitable “stop loss” signals. It is impossible to “artificially” stimulate the economy. Free trade occurs because of subjective valuation reasons. Violence only by definition creates net poverty.
DC: “I guess you can consider that a challenge to show how interpersonal exchange exists given your methodology.”
That’s pure observation of good G being transferred from person A to person B, explained by trade, that which is receieved is valued more than that which is given away in exchange. Sure, lot’s of people fail to correctly distinguish exactly what good G may always be. It can be wholly or partly promises and credit. If trade did not exist, goods and services would not be voluntarily exchanged between people.
Here’s some Mises on “poison”:
msHmA: Part 1, Chapter I. Acting man in paragraph 1.I.38
The opposite of action is not irrational behavior, but a reactive response to stimuli on the part of the bodily organs and instincts which cannot be controlled by the volition of the person concerned. To the same stimulus man can under certain conditions respond both by reactive response and by action. If a man absorbs a poison, the organs react by setting up their forces of antidotal defense; in addition, action may interfere by applying counterpoison.
msHmA: Part 1, Chapter IV. A first analysis of the category of action in paragraph 1.IV.20
The importance of such doctrines is obvious. From his point of view the physiologist is right in distinguishing between sensible action and action contrary to purpose. He is right in contrasting judicious methods of nourishment from unwise methods. He may condemn certain modes of behavior as absurd and opposed to “real” needs. However, such judgments are beside the point for a science dealing with the reality of human action. Not what a man should do, but what he does, counts for praxeology and economics. Hygiene may be right or wrong in calling alcohol and nicotine poisons. But economics must explain the prices of tobacco and liquor as they are, not as they would be under different conditions.
msHmA: Part 4, Chapter XV. The market in paragraph 4.XV.79
Yet there is a far-reaching difference between the sequels resulting from a disregard of the laws of nature and those resulting from a disregard of the laws of praxeology. Of course, both categories of law take care of themselves without requiring any enforcement on the part of man. But the effects of a choice made by an individual are different. A man who absorbs poison harms himself alone. But a man who chooses to resort to robbery upsets the whole social order. While he alone enjoys the short-term gains derived from his action, the disastrous long-term effects harm all the people. His deed is a crime because it has detrimental effects on his fellow men. If society were not to prevent such conduct, it would soon become general and put an end to social cooperation and all the boons the latter confers upon everybody.
msHmA: Part 4, Chapter XXIV. Harmony and conflict of interests in paragraph 4.XXIV.40
The establishment of this truth does not amount to a depreciation of the conclusiveness and the convincing power of the antisocialist argument derived from the impairment of productivity to be expected from socialism. The weight of this objection raised to the socialist plans is so overwhelming that no judicious man could hesitate to choose capitalism. Yet this would still be a choice between alternative systems of society’s economic organization, preference given to one system as against another. However, such is not the alternative. Socialism cannot be realized because it is beyond human power to establish it as a social system. The choice is between capitalism and chaos. A man who chooses between drinking a glass of milk and a glass of a solution of potassium cyanide does not choose between two beverages; he chooses between life and death. A society that chooses between capitalism and socialism does not choose between two social systems; it chooses between social cooperation and the disintegration of society. Socialism is not an alternative to capitalism; it is an alternative to any system under which men can live as human beings. To stress this point is the task of economics as it is the task of biology and chemistry to teach that potassium cyanide is not a nutriment but a deadly poison.
DC: “This medium, which is historically gold, is called ‘money’, but does not exclude the use of other media for exchange.”
Because by definition “gold money” is not the only “media”. You would necessarily be defining yourself out of explaining how and why exchanges which do not involve “money” occur. My approach is more thorough and rigorous, explaining all trade, “money” included.
DC: “rtr, your counter-argument seems to be two-fold. On the one hand, you point out there there doesn’t exist a medium of exchange, only exchanges.”
Correct, there is not a singular “a” or singular “the” in exchange.
DC: “I don’t see a compelling argument that we should stop praxeological analysis at eggs for gold, and not see that an actor’s intent was eggs for gold for X, where X is any range of goods (made possible by gold’s convenience as a medium of exchange).”
Let “eggs” be E. Similarly E is as means to other means in exactly the same Gold “G” is, or Money “M” is. There is not a single universal “medium” of exchange. There is however the most commonly traded thing in exchange. Thus the intent of aquiring M or aquiring G is the same as the intent of producing E.
DC: “Secondly, you point out that anything can be used in the same way that what we call “money” is used (e.g., plasma TVs). I don’t think this is compelling because no Austrian has ever said that gold by its nature excludes anything else being used in an exchange. I might sing for a mansion, or trade water for apples. I see no contradiction.”
Because if “money” were a “medium” that would mean money is not subjectively valued in and of itself, by anyone. If money were truly a “medium”, it would truly be a “medium” for all. It would be like a hot potato nobody would want to hold. There are subjectively valued means which are exchanged for other subjectively valued means.
But even more interesting, from considering what rtr had said, is the funness that, in reality, every and all actions, regardless of morality attached to the actions, are carried out on the grounds that doing something presumes a greater reward than doing nothing. And it is from the chosen actions or inactions that determines behaviour. And, even more so, the complement of each invdividual’s behaviour creates the society in which they live. Hence regardless of how a society is run then almost everyone agrees, more or less, to the way it is being run. Carry this to an overall conclusion and it is that all societies, both active now and long gone, exist/existed according the will of the people involved and negates any possibly of the ‘what if’ question that could have taken history down another path (you know, ‘what if Hitler didn’t exist or didn’t get political aspirations?’). Or, in other words, all current societies have appeared from choices of the past, not accidents and dumb luck. Though, of course, we still make decision in the here and now as to how we can best live our lives according to our situation and abilities too.
So rtr agrees that involuntary trade is not (or not necessarily) mutually beneficial, but doesn’t think that government control and tampering of the money supply and interest rates affects voluntary trade? I don’t think that is entirely justified.
When an exchange occurs, all we know at that point is that the traders agree that it’s their preferred choice over the available alternatives–but don’t the available alternatives have an impact on trade? For example, if a convicted criminal is given the choice of being executed or working in the salt mines, he might understandably prefer working in the salt mines over his available alternatives, but could anybody say that it’s truly a free, voluntary choice?
Likewise, one may “choose” to use the local monopoly electric service over the alternatives of using solar, a generator, or doing without electricity, but clearly one would have more and better options if there were no monopoly granted to the electrical company.
Thus, people may prefer doing business with American fiat dollars over the alternatives (but for how long?), or borrowing at artificially low interest rates, but the legally allowed alternatives represent a restriction of choices caused by government intervention, and current trade merely reflects the best choices of existing options, not the best possible or most desirable choice overall. At what point would a trade so constrained no longer be considered voluntary?
Michael A. Clem: “So rtr agrees that involuntary trade is not (or not necessarily) mutually beneficial, but doesn’t think that government control and tampering of the money supply and interest rates affects voluntary trade?”
Technically involuntary “trade” is an oxymoron. People are freely trading with each other or they are not. If transferance of goods and services is not occuring by voluntary means then it’s only occuring by violent theft. Yes, government violence enforces the value of fiat dollars to some degree. It’s violently enforced “legal tender”. But there is no violence involved when you pick up a $100 fiat note off the street, or likewise a fiat note is voluntarily accepted for some other good.
Michael A. Clem: “When an exchange occurs, all we know at that point is that the traders agree that it’s their preferred choice over the available alternatives–but don’t the available alternatives have an impact on trade? For example, if a convicted criminal is given the choice of being executed or working in the salt mines, he might understandably prefer working in the salt mines over his available alternatives, but could anybody say that it’s truly a free, voluntary choice?”
We can say that the convicted criminal is subjectively wealthier working in the salt mines rather than being executed. He prefers the salt mines to the execution. This is no different than preferring salt to hot sauce. All decisions are “constrained” in some manner, whether it’s lack of perfect knowledge omniscience or alternatives that don’t exist.
Michael A. Clem: “Likewise, one may “choose” to use the local monopoly electric service over the alternatives of using solar, a generator, or doing without electricity, but clearly one would have more and better options if there were no monopoly granted to the electrical company.”
Of course, violence always causes net poverty.
Michael A. Clem: “Thus, people may prefer doing business with American fiat dollars over the alternatives (but for how long?),”
Exactly. That’s a much more accurate question than the false answer given by the ABCT.
Michael A. Clem: “or borrowing at artificially low interest rates,”
Another praxelogical impossibility. /N.P. #14
Michael A. Clem: “but the legally allowed alternatives represent a restriction of choices caused by government intervention, and current trade merely reflects the best choices of existing options, not the best possible or most desirable choice overall.”
Absolutely true. The “bust” is immediate caused net poverty. There’s no “boom” either. Much more powerful than the ABCT.
Michael A. Clem: “At what point would a trade so constrained no longer be considered voluntary?”
No trade will ever voluntarily occur, unless by definition, that which is received is valued more than that which is given away in exchange. By now you should realize the truth of trade is one of the most powerful praxelogical/epistemological truths ever discovered.
“Ludwig von Mises warned of the unintended consequences that result from government interventions.”
how in the world does this relate to reading??
“when prices are adjusted for inflation, Americans today spend ’40% less on clothes, 20% less on food, more than 50% less on appliances, about 25% less on owning and maintaining a car’than they did during the early 1970s. Over that same period, Census Bureau tables show, US median household income rose by at least 18% in constant dollars . . .”
how much did the govt intervent to produce the above? would shamericnas spend 80 percent less on clothes, 40 percent less on food and 90 precent less on appliances if the govt hadnt intervened?
would shamericnas spend 80 percent less on clothes, 40 percent less on food and 90 precent less on appliances if the govt hadnt intervened?
is there someplace i can read that??
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