Keynesian ideas have never left the rooms of government and central-bank decision makers. The essence of the thinking of the most influential economists was and still is Keynesian. So various stimulus packages that are now introduced are a continuation of the same Keynesian policies we have been subjected to for many decades. The present economic crisis is the outcome of the large dose of Keynesianism we have been given over many decades. FULL ARTICLE
Source link: http://blog.mises.org/8878/do-we-need-more-of-keynes-now/
Do We Need More of Keynes Now?
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Adi,
Here’s what you missed, from Rothbard:
” To gauge the economic effects of inflation, let us see what happens when a group of counterfeiters set about their work. Suppose the economy has a supply of 10,000 gold ounces, and counterfeiters, so cunning that they cannot be detected, pump in 2,000 “ounces†more. What will be the consequences? First, there will be a clear gain to the counterfeiters. They take the newly-created money and use it to buy goods and services. In the words of the famous New Yorker cartoon, showing a group of counterfeiters in sober contemplation of their handiwork:
“Retail spending is about to get a needed shot in the arm.â€
Precisely. Local spending, indeed, does get a shot in the arm. The new money works its way, step by step, throughout the economic system. As the new money spreads, it bids prices up—as we have seen, new money can only dilute the effectiveness of each dollar. But this dilution takes time and is therefore uneven; in the meantime, some people gain and other people lose. In short, the counterfeiters and their local retailers have found their incomes increased before any rise in the prices of the things they buy. But, on the other hand, people in remote areas of the economy, who have not yet received the new money, find their buying prices rising before their incomes. Retailers at the other end of the country, for example, will suffer losses. The first receivers of the new money gain most, and at the expense of the latest receivers.
Inflation, then, confers no general social benefit; instead, it redistributes the wealth in favor of the first-comers and at the expense of the laggards in the race. And inflation is, in effect, a race—to see who can get the new money earliest.”
From Michael:
” When the economy is stalled ….”
Please answer the following question. What, in your view, causes an economy to “stall” in the first place?
“michael” in his umpteenth post above, appears to have inadvertantly refuted his own arguments:
“Where the government goes wrong is to continue running deficits, instead of retiring a portion of the money that comes back to them. Greater fiscal responsibility on the part of Congress would get the machinery up and running.”
If michael can give us a documented example of Congress or The Fed ever practicing such “fiscal responsibility” and intentionally deflated the money supply after an intentional inflation, by recalling/retiring the money they “printed” to spur the economy, then we should agree that such a manipulation might make sense as an option to consider amongst others. Whether it is the wisest choice, with the least harmful long-term consequences, is a separate argument.
It appears that michael has the “unconstrained vision” of government that Dr. Thomas Sowell speaks of, http://www2.nationalreview.com/hoover/20081027.mov
I would venture to say that most advocates here who follow the Austrian School have the opposite, “constrained vision:” that human nature obligates us to view with suspicion the powerful and the politicians who claim to act in good faith on our behalf.
[M]ichael should read The Mirage of Inflation, from Hazlitt’s One Lesson and consider whether an intentional centrally-created inflation could ever be stopped or reversed by further central action. (This is a much briefer and easier to digest synopsis of Credit and Money arguments put forth by von Mises, Hayek, et al in their more scholarly volumes.) I have never heard of any historical example of such occurring. Has anyone else?
The core problem with the Keynesian framework is the inability of monetary (and fiscal) stimulus to provide anything other than temporary economic stimulus (absent long-run “money fooling” or the violation of an intertemporal budget constraint, both of which are impossible).
But a secondary – and no less important – problem is the assumed existence of a benign government (benign with respect to social preferences).
That is, Keynes; theory assumes one of two things:
EITHER, the makeup of economic activity is unimportant (all increasess in GDP by expenditure are equal in utility terms)
OR that the government will use its monopoly of violence to extort money which it will then use SOLELY to satisfy inadequate demand IN THE INDUSTRIES IN WHICH PEOPLE WOULD ORDINARILY INVEST.
My worldview is such that I do not believe that there exists any species whose actions are not SELF-interested; this applies especially to species who make their way through parasitism.
Thus government (a parasitic organism composed of members of a political party, where each party has its OWN preferences and its OWN utility function) should be expected to produce socially-optimal results only by chance, specifically when the social optimum coincides with the optimal outcome for the political party in power.
In this I am at serious odds with folks like Aristotle and the other ‘natural aristocrat’ theorists; I believe that if you leave a big pile of money (the tax pot)) lying around, it is far more likely to attract unscrupulous mountebanks, who will swear blind to their intention to utilise it on behalf of the public… and then will set about enriching themselves and their cronies (yes, I’m looking at you, Dick ‘dick’ Cheney).
George Carlin made some very astute observations in his life, but none more so that the idea that if the current state of politics is as bad as we all think it is, then it says something none too complimentary about the polity.
But Carlin missed the idea that power attracts those who seek… power.
Cheerio
GT
France
This was fun reading. Thank you, Michael, for stirring the pot so to speak. But my guess is that your correspondents are just denting their pick on your intellectual hide.
If you’re going to engage in a dialectical debate, you can’t start in the middle of a paragraph to win your point. You have to refute the theoretical basis of the point Shostak makes and you don’t. It makes me suspicious of your claim you have read Mises and Rothbard. If you did, you would at least have challenged the opposing ideas in their “mere” theoretical language.
You point to the need for regulation to stop these pesky business cycles we keep having. This convinces me that you haven’t read the masters.
There are some good papers floating around that point out that the current cycle is just your basic credit cycle caused by the Fed, our central banking authority. The theory behind this concept, developed by Mises, is pretty convincing, if you would read it.
Also, your analysis of the current housing-subprime crisis is not very convincing when you analyze it in a vacuum without considering the impact and role of monetary policy. But I don’t think you’d be open to this kind of analysis.
Here’s something to think about: these cycles seem to becoming more frequent and each time they impact different asset classes. So, if you start pumping money into the system, and you regulate all the “risk” out of the housing market, the bubble will just show up in some other asset class. It always has.
But, here is the challenge to you: let’s see what is the result of the government’s handling of this crisis. My guess is that the result will not be what you think. You think it will grease the wheels of commerce and that things will just go back to normal. You’ll concede some economic distortion, but you think that things will just be great. Let’s see where we are in a year.
All the article can be refuted extremely easily (as Keynes would indeed have done it):
1) YES government is taking the money NOT from thin air but from the existing productive capacity (direct taxation, debt and printing money are all taxation)
2) YES governement is redistributing it to the (currently) non-productive segment (more or less, depending on how you define being “productive”)
3) and YES this is VERY good if the INCREASE in productivity thus created (non-productive group become productive) surpass the DECREASE in productivity from the existing productive group (productive group become less productive)
An easy example of this is:
The money is taken from the productive creator/designer of $10,000 dress for Britney et alia, from the $10 billions bonus of the “productive” banker producer of derivative products AND is redirected to thousands (if not millions) of indigent american children in the form of childhood immunisation and basic health care which will lead to productive citizen in the future instead of poliomyelitis stricken disabled.
That is what Mr Shostak (and most “austrian” economist) still fail to comprehend! Fortunately (for them* and for others) people in the government know
better.
*I say “for them” also because without government funded basic research there would not only be no internet but they would likely not have the life expectancy we all enjoy.
frank,
redistributing wealth reduces the incentive to create wealth. This leads to a poorer society under redistribution as compared to Laissez-Faire conditions. The state can not know ex ante whether its interventions and redistributions will create a more productive society. The fact that the interventions are by definition not voluntary guarantees that the psychic satisfaction of one group is reduced compared ex ante. If it were true that slavery were more productive than free exchange (which is what you advocate in all but name), that would still not make it the best system for the satisfaction of wants, one of which is obviously leisure.
Government’s directing of resources towards particular industries and research guarantees that those industries will become less efficient, bloated, and rent seeking, and that research will be completed as slowly as possible. How else can the newly created beneficiaries of the state’s largess increase their share of the budget? It is amazing that any research is even completed as a result of the massive intervention of the state. This shows that there are altruistic researchers, willing to actually work for their government hand out. I have first hand experience in government research and it is not pretty (sorry taxpayers, I have since become enlightened). It seems as if the only time work gets done is to write up the grant request for the upcoming year.
Research is most efficiently produced under the free market. How many ill children need research on creating more destructive nuclear bombs? How much more money would be available from philanthropists for research on diseases which the market desired to cure if the governmental research leviathan were cut down? Furthermore, how many more charities would be able to efficiently provide care and services to the indigent if the bureaucracy and negative incentives of the welfare state were eliminated? You do realize that state subsidies lead to more of what is subsidized? The state subsidizes single parent indigent families. The state may give a man a fish (after it steals 5 from the productive and consumes 4 for its bureaucracy), instead private charities offer a helping hand.
Frank:
Those are just wonderful ideas, assuming this is not a put on. I think it would be great if such intelligent people like you were put in charge of the economy because you seem to know what’s best for us. Nothing worthwhile is created by business since the government knows best and does it for us. As Decider you can substitute your decisions for the millions of us who are obviously incapable of making our own decisions. Wait, wasn’t this already tried somewhere? As I recall it didn’t work very well.
for stanley and econophile
You make the same errors that ideologue from the left or right do: you see everything as black and white.
Here is the point that you both miss:
1) because driving my car faster (50km/hr instead of 10km/hr) to go home bring me home faster does not mean that driving my car 1000 km/hr will get me home faster!
2) because drinking a glass of water is good does not mean dringing a gallon in one shot is!
So while it is perfectly true that “redistributing wealth reduces the incentive to create wealth”, that does not mean that it does redistributing *some* wealth have beneficial effects that are themselves superior (like creating wealth elsewhere at a faster clip – look again at my examples)
Same for government research: some research are better done in private settings. But some research will NOT occur (unless funded or done by government)
1) because there is NO short-term incentive for corporation where the next quaterly earning statement is usually the most important motivator (options…) and 3-5 years is what is considered long-term (that is John Templeton’s definition! and he is described as himself a long-term investor!).
2) because the research is too risky (high risk of not bearing any result) for even a large corporation, even though on a probability-adjusted basis the potential result would be very worthwhile.
For econophile:
“Nothing worthwhile is created by business”
As I said typical black and white thinking. We had 8 years of that… It killed the republican party.
“As Decider you can substitute your decisions for the millions of us”
Not at all, indeed 250 millions americans have DECIDED this. If you would go and do a referendum wishing to abolish the EPA in the USA (as some “austrian economist” are suggesting), you are 99.999999% certain to lose. Not even the republican would even dare suggest to do so!
However what you want is that very wealthy individual (and whatever the means in which they obtained their wealth – wether by monopolising resources or operating systems, intimidating or threatening, or running the mafia, or wether they are a mentally-handicapped person who just happen to inherit a huge sum) you would have the right of life and death over indigent children (see my example).
Fortunately, we, the people, have said NO.
If you don’t like it you can find a different country (unfortunately for you, there doesn’t exist any such country (as the austrian economist are fanstaming) – it is just as hypothetical, ideologically driven, theoretically and practically impossible (given human nature) than the communist dream).
There isn’t a single successful country on earth without both a market economy AND a strong government.
Indeed without a strong and democratic government a free market economy is impossible.
Frank:
Thanks for the response. I would like to have a nice discussion, but at this point we seem to be standing on different planets which means we haven’t found a common frame of reference with which to begin.
But let me thank you for calling me an ideologue. Mea culpa.
I think Stanley has adequately responded to your suggestion that wealth redistribution has some beneficial effects. I am sure that it does have some good effects as shown by your example, but would that be the best way to solve the problems you point out? Usually statists can think of no other solution to problems other than government intervention. Stanley has pointed out the negative effects of that thinking. In my view it’s a slippery slope which causes less effective results over time than would be otherwise achieved by the free market. And, as Stanley points out, government is a greedy, expansionist leviathan.
You are correct that there is some research that may not be undertaken by the private economy. Usually private research has some aim such as bettering the public by providing things they want (i.e., are willing to pay for). Rarely does private research aim at something people don’t want. I would grant that there may have been some good research that has come out of government labs, but see the above paragraph. How do you know such research wouldn’t have come from the private realm?
Like many critics of the free market you look at the Republican Party or the Bush administration and assume that’s the free market in action. If so, and I apologize in advance if I am wrong here in my assumption about you, you are incorrect. You are saying that the rest of the country has the right to trample my rights, which, as you point out, is exactly what they have done. You think this is fine. I think it has lead to a loss of my freedom as defined under our Constitution and a reduction in wealth and well being for everyone. I think the Austrians have explained this phenomenon quite well.
Frank, I’m not ready to bail out of here any time soon, so my goal is to make it a better place. Sorry you disagree. Be careful what you wish for, as they say.
Frank: “that does not mean that it does redistributing *some* wealth have beneficial effects that are themselves superior (like creating wealth elsewhere at a faster clip – look again at my examples)…â€
There is only one way to create wealth, and that is through savings. Savings are invested in new business ventures, new equipment and new technologies. That’s not to say that charity isn’t a good thing. It is. But it doesn’t create wealth. In fact, giving to charity reduces the amount of savings available for investment and retards wealth production. But it still may be worth it.
The real question is not whether to help people or not, but whether private charity is better than state charity. Anyone who has studied the issue knows that private charity is far more effective and efficient than state charity. The same thing goes for state-funded research, which is mostly waste. Although some research may not be funded for profit, history has proven that wealthy individuals will provide the necessary funds for such research. There is no need to the waste that state-funded research creates.
“How do you know such research wouldn’t have come from the private realm?”
1) Because, as I has explained, there would be no short-term (less than 5 years) private benefit for doing so.
2) because the result of the research may not be safeguarded by patent.
Ex:
a) no research will get done on a naturally occuring inexpensive product that could have significant health benefit because you would not be able to finance the expensive double-blind studies with patents (since you cannot patent it)
b) no private research would be done for preventive or epidemiologic research. There is no (sufficient) money to be made by an individual for telling the world that X activity is dangerous (and no, selling a book on it is not enough to pay for that type of research). And yet the benefit can be absolutely extraordinary (and compensate handfully for improductive reserach – just like publicity – you don’t know which add will actually gives result until you try it)
“The real question is not whether to help people or not, but whether private charity is better than state charity.”
Not at all.
The real question is: does redistributing wealth CREATE wealth by redistibuting money/savings from improductive activities ($10 millions bonus to CEO who bankrupt their banks, destroy business, and dilapidate the life-time saving of individual) to HIGHLY productive activities such as childhood immunisation.
But I do understand that you trying to go around the question! Because you indeed know the answer and it doesn’t “fit” your theory, and you face the same problem as the communists: reality is stubborn and doesn’t “fit” ! So let’s not answer the troubling question and repeat an irrelevant mantra
Nonetheless, this should not be taken as a complete criticism of the austrian school. There is fundamental absolutely essential principles in it and actually I do think it is in years ahead better then the corrupt Bush’s republicans. Nevertheless, and this is what I deplore, by trying to misapply it, shall I say mindlessly, in situation where either the theory does not fit because other parameters must be taken into account, or the theory is ok, but the “practitionners” can figure out how to apply it, you do a great disservice because you turn off virtually every intelligent person. (The case I presented you is typical of why people walk away from the austrian school).
Result: you become a marginal ideology easily dismissed. In a sense you don’t think that Adam and Eve were created with dinosaurs as a famous person think (and you can see her fate…), but you are not too far from the equivalent in the economic world.
I think with a little bit of introspection and a little more of sophistication you could turn it into something VERY useful. But for this to happen, you would need economists that are not only repeating “classic” authors but actually improve on it.
“The introduction of money doesn’t change what was said so far. For instance the baker can exchange his ten loaves of bread for $10 — he then uses money to secure ten potatoes. Likewise the potato farmer can now exchange his ten dollars for ten loaves of bread. Observe that, apart from fulfilling the role of the medium of exchange, money has contributed absolutely nothing to the production of bread and potatoes.
Nonproductive Consumption
So far we have seen that to secure potatoes, the baker had to exchange bread for money and then employed money to secure potatoes. Something was exchanged for money, which in turn was exchanged for something else — or something for something is exchanged with the help of money.
Trouble erupts when money is created “out of thin air.” Such money gives rise to consumption, which is not backed by any production. It leads to an exchange of nothing for something.” Frank Shostak
For the 10 $, I don’t see any difference if this 10 $ is coming from the king, or the central bank, or a counterfeiter: the baker can exchange his ten loaves of bread for this $10, and then uses this money to secure his ten potatoes, whatever the source of this 10 $. In either way, this 10 $ is backed by any production.
frank,
Austrian Economics is an a priori science. If there is no logical error in the deduction, then based on the truth of the action axiom, the deduction is true. I fear that it is people who fall into the trap of the middle of the road reasoning as pointed out by Mises who are in need of introspection. In your example you have assumed a particular set of values and their ordering and utilize force to obtain them. By doing this you are stepping from the economic realm to the political and ethical. Austrian Economic Theory and History prove that attempts by planners to inflict their value scale on society leads to a poorer society. Being a value free science, Austrian Economics doesn’t tell you what to do or not to do in a particular situation, it only can tell you what outcomes may happen when a particular action is taken. The fact remains that central planning leads to a lower overall level of satisfaction for society.
The onus is on you to explain why the negative ramifications, which will be both direct and indirect, of your planning are justified in a coherent and universal manner. For you have instituted an ethic by the political enforcement of your values. If you say that for utilitarian reasons we must rob A and give to B to help C, you must be aware that this ethic is not universal and a very dangerous ethic to subscribe to. Rothbard points to an example of utilitarian ethic in action in the case of a small town with a very small minority of redheads. The majority of the town dislikes redheads and would receive satisfaction, and would even increase productivity and scientific advancement if they were not so distracted in their animosity towards redheads. The utilitarian ethic would say that the best solution is the final solution. Eliminate the redheads and the majority will increase their satisfaction and subsequently their productive capacity. Luckily you seem to have a dictatorial or monarchical viewpoint of implementing your values, in this case, society may be better off than in a democracy where the former illustration has a greater potential for occurring. You as dictator may see financial benefit for yourself in merely forcing these individuals to leave(after taxing them of course), or trading them like chattel to locales outside of your realm.
If you want to discover where you have gone wrong, I recommend Rothbard’s, “The Ethics of Liberty.” If you don’t believe in natural rights and you still wish to subscribe to utilitarianism, I recommend that you read Henry Hazlitt’s, “Foundations of Morality.”
“Austrian Economics doesn’t tell you what to do or not to do in a particular situation, it only can tell you what outcomes may happen when a particular action is taken.”
“Austrian Economics is an a priori science. If there is no logical error in the deduction, then based on the truth of the action axiom, the deduction is true”
Ok, if I “redistribute” the 10 millions bonus of failing bankers to institute universal childhood immunisation, then austrian economics tell me that I will make a few very incompetent bankers quite unhappy and make millions of children healthier and grateful
Youpi! No problem with austrian economics!
“Austrian Economic Theory and History prove that attempts by planners to inflict their value scale on society leads to a poorer society.”
Oups! what is happening here! :
Value scale? –> weren’t we suppose to not “assumed a particular set of values” ?
History? —> wasn’t it an a priori theory? Then what has reality (aka history) has to do with it? Since when to we need to check history to verify that 2+2 was equal to 4, 10 years ago? So it isn’t anymore a “deductive” theory?
“The fact remains that central planning leads to a lower overall level of satisfaction for society. ”
Again !
1) “lower overall level of satisfaction” => value judgment!
2) “the fact remains” => not anymore a deductive theory but a theory verify by EMPIRICAL FACTS !?
And then you get to the really uncomfortable stuff: if you are “valuing” something better than something else, then you have to also accept that I can value childhood immunisation better then the incompetent bankers bonus. It’s my values against yours. Who wins? Depends if you are in a religious country (the dogma wins), a dictatorship (the dictator’s view wins) or a democracy (the majority wins). As a matter of facts, in most western democracy, majority has chosen childhood immunisation.
So in conclusion: inasmuch austrian economy is deductive, no problem we agree but really there is not much use for it. But as soon as you enter the real world or use it to say that something is more “valuable” then something else then you enter the non-deductive realms and then you can either
1) extends austrian economy to the empirical world, or
2) keep it as a deductive theory (in which case you cannot issue value judgement regarding any democratic law pass, including any law that would redistribute property)
You logically have to chose between the 2. What will your choice be?
frank: ‘Value scale? –> weren’t we suppose to not “assumed a particular set of values” ?’
Value scales are demonstrated through action. If I choose X over Y, then I value X > Y. If my value scale is such that X > Y, then aggressive force isn’t required for me to choose X. If aggressive force is used to make me choose, then it makes me choose Y, which I value less than X.
Central planners use aggressive force to achieve their goals, therefore their goals run counter to the value scales of those upon whom the aggression is imposed.
frank: ‘if you are “valuing” something better than something else, then you have to also accept that I can value childhood immunisation better then the incompetent bankers bonus. It’s my values against yours. Who wins?’
In order to minimize dissatisfaction so far as we can measure, everyone would put their personal property to the uses they value most. You are free to put your resources toward childhood immunization, and others are free to give money to bankers, etc. Nobody should “win” the wrestling of others’ resources out of their hands unless your goal is to increase conflict.
We try to recognize (and respect) private ownership, in order to minimize conflict over scarce resources, in order to minimize dissatisfaction.
“Central planners use aggressive force to achieve their goals”
Yes, but in a DEMOCRACY the majority wins. So if people gives the government to mandate to redistribute the incompetent bankers money to childhood immunisation, what is an austrian economist to do? Destroy democracy?
Of course one could answer like Stanley: “redistributing wealth reduces the incentive to create wealth” and vice versa and therefore, the redistributive action would have for effect to reduce the incentive to have greedy incompetents as bankers and increase the incentive to create and provide childhood immunisation, and one would have to live with the consequence of the democratic decision as predicted by austrian economist. But this is exactly the outcome that the democratic people wanted !
“Nobody should “win” the wrestling of others’ resources out of their hands unless your goal is to increase conflict.”
But you are assuming that there is an universally accepted (value-free) determination of what constitutes personal property, and this is not the case. Even among austrian economist there is a big debate of wether software patents should constitute property. And what about inheritance when the money came for “illicit” (but then it may not have been illicit!) gains (from other generation like slave owners), etc.
So you are back to square one: what you consider property may be different from what other considers “property”. There is an inherent subjective (shall I say, *value* element to it) aspect to it. For example, personnally I might not consider the incompetent bankers bonus to be “licit” property at all even though you might. So who decide? In a democracry, the majority. So if the majority decide to “redistribute” those bonus, they may not in fact not be taking the “property” of someone else at all (if they define property differently then you do).
frank,
It is disturbing that you accept as healthy the tyranny of the majority. Did you not read my recounting of Rothbard’s fictional anecdote. Did it not illustrate clearly enough the danger behind the utilitarian ethic and majoritarian rule?
You seem to want to talk ethics while constantly cloaking your scheme of redistribution in economic trappings. It is true that any ethical system will have economic repercussions, but let’s clear the air. You are defending slavery as long as the majority imposes it. Clearly this is not a universal ethic and thus can not be the foundation of a stable political system. You accuse me of falling into the trap of leftist idealogues, when your ethic obviously sets the stage for Marxist class conflict (really caste). John C Calhoun recognized that there are two ways to gain wealth, the economic means and the political means. He recognized that there are two different groups of people under a redistribution regime, the net tax payers and the net tax recipients. You create a system guaranteed to have inherent conflict and unable to provide equality before the law. You propose a society based on might makes right. How have your proposals advanced the basis of society beyond stone age bands of marauders and brigands?
“You create a system guaranteed to have inherent conflict and unable to provide equality before the law”
I just explained to you that what is the “law” IS already conflictual. Property rights are defined differently for different people. So your argument falls flat. You want to remove inherent “economic” conflict by “a priori” dream-world “conflict-less” property rights.
But in the real world, property right are just as inherently conflictual as the economy. It’s the human/animal nature. Whoever is most powerful will write property law to advantage himsel. You cannot “talk away” conflict with nice-sounding words. You are just like the marxists: you have created a world that does not and cannot exist.
But I understand you: it is fun to dream! It is a form of evasion from the daily life. It’s like religion or alcool. And that may be what makes the appeal of utopian austrian economy!
Now come back to reality… it’s time to go back to work!
frank: ‘ …in a DEMOCRACY the majority wins. So if people gives the government to mandate to redistribute the incompetent bankers money to childhood immunisation, what is an austrian economist to do? ‘
The Austrian economist points out that not all the people agree. If a hypothetical society is so democratic that the wishes of the majority are directly carried out, then the team of central planners is made up of the majority of voters. Unless there is 100% agreement, then there is conflict.
‘Destroy democracy? ‘
I think a better system can be proposed. Prejudice of thought, in this case in the favor of democracy, is detrimental to the understanding.
‘ But you are assuming that there is an universally accepted (value-free) determination of what constitutes personal property… ‘
I assume no such thing. As I said, “we try to recognize (and respect) private ownership”, and this is a constant struggle. Why should we not expect disagreement over what constitutes “property”? It is unreasonable to expect to solve all our problems in a day.
‘ …what you consider property may be different from what other considers “property”. ‘
I agree. And I don’t expect a ravenous wolf to behave as a sheep. There are individuals who see me as their property. As long as such individuals exist, no system will eliminate conflict. My personal goal is to reason with others who *aren’t* sociopaths in order to proceed to that situation as close to the ideal as can be attained. If you see others as your property, then I don’t expect you to understand.
‘ So who decide? In a democracry, the majority. ‘
You present a good case against democracy. People, given their unique value scales, are likely to use democracy to achieve their ends at the expense of others. In this way democracy is used as a tool for conflict. Perhaps democracy should be cast aside in favor of a system that does not promote conflict.
“Nobody should “win” the wrestling of others’ resources out of their hands unless your goal is to increase conflict.”
“Why should we not expect disagreement over what constitutes “property”? ”
Great. Now (after I did orient you) you have finally spot the weakness of your own argument (even though you might not have realised it yet!). This is because, if you decry the “wrestling… ” that increase conflict than clearly you must also be decrying the “disagreement over what constitutes “property”" which is also source of conflict.
So now you can see reality more clearly: reality is not reality with everything you don’t like neatly removed to fit a nice aseptic version of reality that fit like magic the austrian economist prejudices. Reality is messy, it is made of choices. And that includes 1) how you define property and 2) how you allocate resources.
And the values implicit in those choices will always clash between individual (a good example is between you and me!). Society as we know it is the current embodiement of the current resolution of those clashes based on myriad of individual decisions express through the markets and political decision making (easier made in a functioning democrary).
The result is that slavery was abolished (wether you like it or not – I guess you might have had a definition of property different from most people have nowadays) and that universal health care for children is a reality save for a few poor countries in Africa and a large western country which I will be polite not to name (but this is going to change pretty soon as the people of that country have recently cast their vote for some change to come!)
Frank:
If you haven’t read any of the Austrians, I highly recommend starting with Henry Hazlitt’s “Economics in One Lesson.” Perhaps then we can have a conversation. Like many people, I think that you really don’t know what the Austrians are about. I would say that many of the adherents of Austrian theory have read Keynes and many of the treatises supporting your belief in statist solutions, but have rejected them. You could return the favor by reading something that Austrians believe is a good start for someone who hasn’t explored their ideas.
As an aside, regarding your comments on research, it took about 26 years for private companies to develop Lipitor. This includes the orginal research and discovery of statins. Lipitor itself was finally synthesized in 1985, but wasn’t brought to market until 1997. Estimates are that it takes about $800,000,000 to bring such a drug to market these days. So, unlike much of government research, private companies brought about a drug that took many years to develop, is beneficial to humanity, and makes money for Pfizer.
Econophile
Sorry, but I have ALREADY read Hazlitt’s book (a very good book) and also Gene Callahan book (some parts good, some other thoroughly ridiculous – like the chapters where he recommends switching EPA to be replaced by Consumer’s Report ! – This is the type of sheer stupidity and ignorance that lead me to believe that either current austrian economist are either mindless or suicidal.
On the other hand I recommend that you reread my post. You have not answered the main points, so maybe you need to read them a few times to understand them. You are like marxists or religious folks: you have a dogma to defend and so are totally unable to be open to arguments that would shake the dogma. In such minds: dogma is first… reality is second…
This is quite unfortunate. It is a sheer waste of brain power.
As for:
“So, unlike much of government research, private companies brought about a drug that took many years to develop, is beneficial to humanity, and makes money for Pfizer.”
This is a good example of ideology.
NOBODY has ever said that private companies cannot perform well (although I understand that your point was that this was a long duration research – but this is a SPECIAL case brought in by patents AS I EXPLAINED TO YOU BEFORE (again: when the final product is not patentable, the private research CANNOT and WILL NOT occur))
Furthermore you conveniently left aside that all the researchers benefited from signification education (from kindergarden and up) and infrastructure that could NOT have ALL been provided by private industries (as I have explained to you before and above).
And so:
1) without government’s prior investment in those infrastructure, lipitor would likely NOT exist
2) and must listen to your own smarter folks (such as Bastiat): there is what you see and what you don’t
a) you see: Lipitor and think this private investment is great and it is
b) you don’t see: what all that money invested elsewhere could have produced, including PUBLICISING (at dramatically lower cost) government funded research that have established the simple fact that eating 3 servings of high omega-3 fish (such as salmon) is preventively-wise AS EFFECTIVE as Lipitor (with 50% reduction of risk of heart disease) and with non of the side-effects (and no, there is no sufficient mercury in salmon to be concerned about before you try to re-broadcast pfizer sponsored neo-conservative despicable disinformation). And the fact you didn’t know about this shows exactly the point that Bastiat made (and in this case it is worse because there is ACTIVE DISINFORMATION involved by private company and impossibility for Joe the plumber to clarify it (insufficient time, money and education) (and Consumer’s Report does not have the money to advertise like Pfizer… and would have nothing to advertise if the government research on omega-3 fish hadn’t been done)
In fact I believed in some sense that great minds such as Bastiat have been highjacked by a bigotry following that have deformed and mostly destroys the common sense out of originally very sound economic points.
Frank,
Sorry to burst your bubble, but you haven’t said anything new. People disagree over what constitutes property. Duh.
‘ Reality is … made of choices. ‘
Another “new” piece of information?
‘ The result is that slavery was abolished (wether you like it or not… ‘
??? If either of us supports slavery, it’s you. You seem to have the idea that it is OK to use aggression to attain your wants. I can only make a personal value judgement that that makes you a threat to my safety, but not that you shouldn’t pursue your happiness based on your own set of values.
If you don’t see other people as your property then say so. Otherwise, you’re wasting our time.
Kevin
Ok, I understand you don’t want to answer.
I know it must be difficult for you to have to deal with someone who actually confront your dogma
You react like an economic “taliban” and many of the sects and religions that abound.
There is nothing I can do for you. You’ve been brainwashed. I don’t think there is an easy cure for it. You might want to read of few good books on it (check amazon)
As for myself, I realised that so-called current “austrian economist” are simply a bunch of mindless robot repeating a mantra almost exactly like the neo-conservative pundits we see on fox news. I don’t think it’s a fullfilling life, but hey, everybody can live the life they want or are stuck in !
It is no surprise that the usa in the last 8 years has been an historic case example of how stupidity, corruption and greed can dramatically harm even a strong country.
I live in Canada and I so glad I am not living in the USA. Here, it’s like breathing fresh air. The true wealth per capita (INCLUDING human life quality) is astonishingly higher.
This is my last post.
I got the final anwer loud and clear: there is nothing to be expected to be learned from zealots pseudo-economists.
goodbye frank
Goodbye, Frank.
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