Jeff Prince

Album Review - The Beach Boys ~ Pet Sounds

2010-07-25T09:06:00.000-07:00

Some people say that Brian Wilson is a genius. I'm one of those people. This is my favorite album.

Album Review(s)-Kraftwerk

2010-07-13T21:48:00.000-07:00

I've never done an album review before, and I may never do another one, but I read Mark Prindle and George Starostin's reviews a lot and think "I can do that", So I wanted to talk about three Kraftwerk (kraftwerk is a German word meaning "work of crafts") albums: Trans-Europe Express, The Man-Machine, and Computer World. I'm not sure which is my favorite yet, but I know it's not Computer World. Oddly, Trans-Europe Express and The Man-Machine sound very futuristic while Computer World can sound quite dated at times. One of my favorite moments on Computer World is the jumble of whispered numbers (I'm guessing it's just numbers) that makes up last minute and ten seconds of "Computer World . . 2 (Alternate Version)". However, if you only listen to one track from Computer World, make it "Computer Love".

Trans-Europe Express is sort of a double concept album, but the two concepts (1- disparities between reality and image, 2- glorification of Europe) have nothing to do with each other. "Europe Endless" is such a great song, I don't even mind that it's nine minutes long, but I have a question. Why is it that the snare hit at 2:44-2:45 (during the "less" in the second "life is timeless") has a much darker and heavier sound to it than every other snare hit in the song? Just listen. Also worth noting is the song "Trans-Europe Express", which some guy sampled a part of for his own song and it was apparently a big deal somewhere.

If "Europe Endless" isn't my favorite Kraftwerk song, it's "The Robots", which is the quintessential Kraftwerk song (and video). "Metropolis" conjures up images of a futuristic urban dystopia... or something. The lyrics of "The Model" feature a rhyme scheme of AABBWTF?

Even 30 years later, Kraftwerk sounds like the music of the future (they are to music what Dippin' Dots are to ice cream). I would think that people like Ray Kurzweil, or the Revenge of the Nerds guys would enjoy Kraftwerk, but I really get a kick out of the fact that four nerdy looking German guys have been such a big influence on people like Dr. Dre.

Unintentional Comedy From 60 Minutes

2010-04-26T07:36:00.000-07:00

8:35 to 8:58 could've been from the Daily Show:

After the Loma Prieta quake, the report, "Competing Against Time," put Californians on notice that their roads and bridges needed fixing.

"It's what we go back to when we need to remember that we've got to move quickly and we've got to try and get the project completed," Ney said.

":Okay, you say 'quickly.' The document was done in May of 1990," Pitts pointed out. "It's been a long time."

"It has been a long time," Ney acknowledged.

Watch CBS News Videos Online

Hey Glenn Beck

2010-03-12T05:51:00.000-08:00

If you're going to spend time going after the "socialist" lyrics of the Beatles and Woody Guthrie, I expect you to have some pretty harsh words for Francis Bellamy.

Just When You Thought It Couldn't Get Any Dumber Than The Tea Party

2010-03-03T14:59:00.000-08:00

The Coffee Party comes along.

MISSION: The Coffee Party Movement gives voice to Americans who want to see cooperation in government. We recognize that the federal government is not the enemy of the people, but the expression of our collective will, and that we must participate in the democratic process in order to address the challenges that we face as Americans. As voters and grassroots volunteers, we will support leaders who work toward positive solutions, and hold accountable those who obstruct them.

I could go through line by line and critique everything in that statement, but it'd be a lot easier to just tell these people...

Why is it that the world never remembered the name of...

2010-02-13T17:47:00.000-08:00

Johann Gambolputty de von Ausfern-schplenden-schlitter-crasscrenbon-fried-digger-dingle-dangle-dongle-dungle-burstein-von-knacker-thrasher-apple-banger-horowitz-ticolensic-grander-knotty-spelltinkle-grandlich-grumblemeyer-spelterwasser-kurstlich-himbleeisen-bahnwagen-gutenabend-bitte-ein-nürnburger-bratwustle-gerspurten-mitz-weimache-luber-hundsfut-gumberaber-shönedanker-kalbsfleisch-mittler-aucher von Hautkopft of Ulm?

Look At You...

2010-02-01T16:21:00.000-08:00

KRAMER: You're wasting your life.

GEORGE: I am not! What you call wasting, I call living! I'm living my life!

KRAMER: O.K., like what? No, tell me! Do you have a job?

GEORGE: No.

KRAMER: You got money?

GEORGE: No.

KRAMER: Do you have a woman?

GEORGE: No.

KRAMER: Do you have any prospects?

GEORGE: No.

KRAMER: You got anything on the horizon?

GEORGE: Uh...no.

KRAMER: Do you have any action at all?

GEORGE: No.

KRAMER: Do you have any conceivable reason for even getting up in the morning?

GEORGE: I like to get the Daily News!

The Liberals Can Understand Everything But People Who Don't Understand Them

2010-01-23T09:08:00.000-08:00

This reminded me of the Lenny Bruce quote in the title: Sarah Silverman tweets "Liberals, in general, are more progressive and open minded, whereas conservatives tend to be more closed minded and faggotish." I know Sarah Silverman's style of comedy, and I like her show, but I'm trying to figure out if she's being totally tongue-in-cheek with this statement. I know she is a liberal too, and I know that a large number of liberals seriously believe that they are the open minded ones and that conservatives are the close minded ones. Oh well... either way, she's funny.

Peace Among Libertarians

2010-01-20T11:02:00.000-08:00

As a fan of both Walter Block and Steven Horwitz, I hope we can acheive peace among libertarians. Here's Dr. Block's peace plan:
"Let us delve as deeply as we can into the political economic philosophy we all embody, Austro-libertarianism. Let us do so without fear or favor, and let the chips fall where they may. Let us feel free to wholeheartedly criticize one another, always keeping in mind that the goal is to seek truth and promote liberty. But let us resolve, also, not to allow nastiness to overtake us. Let us agree to disagree, where we must, without rancor."
And here's Mario Rizzo's plea for peace.

Disappointing

2010-01-16T09:16:00.000-08:00

Between this and this, I don't know how I to feel about the Paul family anymore.

There Can't Be A Practical Reason For Believing What Isn't True

2010-01-03T08:26:00.000-08:00

Q: "Do you think there's a practical reason for having...um...a religious belief for...for many people?"

A: "Well, there can't be a practical reason for believing what isn't true. That's quite...just I rule it out as impossible. Either the thing is true or it isn't: if it is true you should believe it and if it isn't you shouldn't. And...if you can't find out whether it's true or whether it isn't, you should suspend judgment. But you can't...it seems to me a fundamental dishonesty and a fundamental treachery to intellectual integrity to hold a belief because you think it's useful and not because you think it's true."

Paul Samuelson

2009-12-14T05:53:00.000-08:00

A few thoughts (taken from facebook) from real economists on Paul Samuelson:

Steve Horwitz- RIP Paul Samuelson. The irony is that his worldview was, unfortunately, just coming back into fashion. He was a smart man and perhaps a kind one, but he was wrong about a lot. His professional contributions, especially his textbook, did immense damage to economic understanding as well as human prosperity and freedom.

Robert Higgs- Many people who take Samuelson to have done damage have in mind his views in favor of government fiscal activism, intervention to remedy so-called market failures, and the like. In my view, Samuelson's greatest damage arose from the enormous success he had in persuading the economics profession to adopt the methodology of nineteenth-century physics as fully applicable to the study of economics. This turn, in which his Foundations of Economic Analysis served as a sort of Bible, has been an utter disaster for the economics profession around the world. It is far from clear that economists will ever disavow this disastrous development, given how deeply invested in it they are.

Going Rogue?

2009-12-03T06:40:00.000-08:00

Rogue (adjective)
1 : resembling or suggesting a rogue elephant especially in being isolated, aberrant, dangerous, or uncontrollable
2 : corrupt, dishonest
3 : of or being a nation whose leaders defy international law or norms of international behavior
Definition taken from the Merriam-Webster online dictionary

Which definition of "rogue" is Sarah Palin going for? Why would a conservative politician want to characterize themselves as being aberrant, dangerous, uncontrollable, corrupt, and dishonest? Isn't this the image that all politicians wish to distance themselves from?

What's The Big Deal?

2009-12-01T05:50:00.000-08:00

Some conservatives have their undies in a bunch over this graph showing how little private sector experience Obama's cabinet appointments have.
I have to say I don't really see what the big deal is about this. Are they afraid that the government is going to cease to be the efficient well-oiled machine that it was under George W. Bush? And what exactly would have made these conservatives happy? If he had a higher percentage (lets say somewhere around Clinton levels), wouldn't we be hearing something along the lines of "LOOK! OBAMA SAID THERE WAS GONNA BE CHANGE BUT I GUESS IT'S JUST BUSINESS AS USUAL AT THE WHITE HOUSE!!!!!11"

I'm #1 (through the transitive property)

2009-11-29T12:21:00.000-08:00

Thanks to me, David Kramer had the most read item on LRC and the LRC blog this week. Strangely, the link in Lew's post doesn't work. It takes you to this. The first part of the address is right, but after the correct address there's a space and then the number 34,178. Does that mean that post got 34,178 hits this week?

UPDATE 11/30/09- I'm #2 for the month! Also, they fixed the link.

Brian Wilson & George Gershwin

2009-11-08T14:03:00.000-08:00

Some people seem to be surprised at the choice of Brian Wilson to complete some unfinished Gershwin works. In the two links above, the partnership is described as "weird" and "a surprise union". I have to say that as a huge fan of Wilson and Gershwin, it does not seem weird or farfetched at all. I could not think of a more perfect contemporary match for Gershwin than Wilson. He would have been my first choice to finish those songs (although I'd like to have a crack at them myself). I think if you are a serious fan of the Beach Boys and Brian's solo work, you can hear the Gershwin influence. Todd Gershwin sees the connection. George's great-nephew and a trustee of the George Gershwin family trusts, said, "George for his time was a visionary. He certainly crossed genres and musical lines, tried things that hadn't been done before and Brian Wilson has done exactly the same thing." Brad Rosenberger, senior vice president of catalog development and marketing for Warner/Chappell also seems to get it. He said that "'Smile' is 'Rhapsody in Blue' circa 2004. It's very experimental, very rich and very melodic and really pushed popular music."

Replies To 'Capitalism: A Love Story'

2009-10-20T20:58:00.000-07:00

Michael Moore ignores that capitalism relieves poverty - Joel Montgomery
Capitalism: A Love Story - The Freedomain Radio Review - Stefan Molyneux
What's Michael Moore Talking About? - John Stossel
Frustrating Michael Moore - Sheldon Richman
Michael Moore Wants to End the Fed (He Just Doesn't Realize It) - Tom Mullen
'Capitalism': This time, Moore is less - Brian Calle
Michael Moore Is Clueless on 'Capitalism' - Jonathan Hoenig
Lying Propaganda - Walter Williams

Before We Give Health Care To The Government...

2009-10-13T20:53:00.000-07:00

"It is instructive to make a list of the universally acknowledged problem areas of our economy and our society, and we will find running through that list a common glaring leitmotif: government. In all the high problem areas, government operation or control has been especially conspicuous.

Let us consider:

Foreign policy and war: Exclusively governmental.
Conscription: Exclusively governmental.
Crime in the streets: The police and the judges are a monopoly of government, and so are the streets.
Welfare system: The problem is in government welfare; there is no special problem in the private welfare agencies.
Water pollution: Municipally owned garbage is dumped in government owned rivers and oceans.
Postal service: The failings are in the government owned Post Office, not, for example, among such highly successful private competitors as bus-delivered packages and the Independent Postal System of America, for third-class mail.
The military-industrial complex: Rests entirely on government contracts.
Railroads: Subsidized and regulated heavily by government for a century.
Telephone: A government-privileged monopoly.
Gas and electric: A government-privileged monopoly.
Housing: Bedeviled by rent controls, property taxes, zoning laws, and urban renewal programs (all government).
Excess highways: All built and owned by government.
Union restrictions and strikes: The result of government privilege, notably in the Wagner Act of 1935.
High taxation: Exclusively governmental.
The schools: Almost all governmental, or if not directly so, heavily government subsidized and regulated.
Wiretapping and invasion of civil liberties: Almost all done by government.
Money and inflation: The money and banking system is totally under the control and manipulation of government.

Examine the problem areas, and everywhere, like a red thread, there lies the overweening stain of government. In contrast, consider the frisbee industry. Frisbees are produced, sold, and purchased without headaches, without upheavals, without mass breakdowns or protests. As a relatively free industry, the peaceful and productive frisbee business is a model of what the American economy once was and can be again — if it is freed of the repressive shackles of big government."

~Murray Rothbard, Capitalism versus Statism

More Exchanges With A Universal Health Care Proponent

2009-10-04T09:55:00.000-07:00

Here's another discussion between me, JP, and MA. MA posted this video, adding "DEMOCRAT WITH BALLS! GOP Health Care Plan: "Don't Get Sick! And if You Do Get Sick, Die Quickly!"". I left the first comment, and it went from there.

JP- its at least refreshing to see a democrat with a spine (even if i think he's totally wrong on this). they've got a f*cking supermajority and they can't get anything through.

MA- I know right? It's like seeing bigfoot, or a fucking UFO!

MA- And speaking of, is there a libertarian plan for providing health-care?

JP- Our plan would be the free market, although I hesitate to use the word "plan". To me, the word "plan" brings to mind a system where some central authority (the government) is calling the shots and directing people. What makes free markets unique is that there is no central plan, individuals are simply left free to plan for themselves. This article basically explains what I'm trying to say: http://www.fff.org/comment/com0907e.asp I like the question at the beginning: "Can a handful of congressmen, most of whom probably have never even run a small business, design an entire market for medical services and insurance?"

MA- And is this way of providing health-care proved to work, or is it more of a ideological pipe-dream?

JP- It might be a pipe dream in that there might never be a free market in health care, but I do think free markets have proven that they can deliver goods and services in an efficient manner.

MA- Did you skip the first part of the question though? :)

JP- It's been so long since the US (or any country as far as I know) has had a free market in health care, it's hard to say a complete free market system would work based on evidence. But there are some areas even now where I think the private sector has shown its worth (and superiority over government). Life insurance has been left alone in the US, and it works quite well: http://www.john-goodman-blog.com/are-health-insurance-companies-the-villains/ Wal-Mart's private health clinics have been a success http://mises.org/story/3233 The US market for pharmaceuticals is less regulated than in other countries, and because of the drive for profits there is much more innovation in drugs here (which also benefits other more socialized countries) http://www.city-journal.org/2009/eon0922bp.html

JP- Also, touching on something we were debating before, here's an article about about how US health care might not be the reason for our lower life expectancy. http://www.nytimes.com/2009/09/22/science/22tier.html

JP- Free markets and capitalism beat socialism and central planning just about every time, and health care is just one example of that. If we define a pipe dream as something that could never happen, than it's completely possible that free market health care is a pipe dream. However, if we define a pipe dream as a system that could never work, even if implemented, then I think experience shows us that socialized medicine is the real pipe dream: http://mises.org/story/3650

MA- I am not interested in debating with ideology, because all ideologies (which include religions) are pipe dreams (definition according to webster: an illusory or fantastic plan, hope, or story).

"Basically, theory means you have ideas; an ideology means ideas have you. [...] An ideology, in contrast, is a set of "fixed" ideas which people believe dogmatically, usually ignoring reality or "changing" it so as to fit with the ideology, which is (by definition) correct. All such "fixed" ideas are the source of tyranny and contradiction, leading to attempts to make everyone fit onto a Procrustean Bed. This will be true regardless of the ideology in question -- Leninism, Objectivism, "Libertarianism," or whatever..."

- Taken from the Anarchist FAQ

And seriously man, if you get all your facts about any issue from partisan websites, you do realize that you're getting a spin, right?

MA- What I am saying is that political decisions have to be established the same way that scientific theories are established:

http://www.wellingtongrey.net/miscellanea/archive/2007-01-15%20--%20science%20vs%20faith.png

JP- I don't get all my facts from partisan websites. The articles I've posted here are not the only articles I've ever read in my life, and the websites they are from are not the only ones I visit.

MA- Just saying man, every time you provide evidence, you provide it from partisan websites/authors. That's why I was asking for evidence in the first place. I wasn't accusing you at all for reading only partisan texts...

JP- As for you're other comments, you're opening a whole other can of worms separate from the health care issue about the use of the scientific method in the social sciences, empiricism, positivism, and all that crap.

MA- Well do comment, I'd like to hear what you think. I don't know when will I reply though, since I am taking my car to the auto-mechanic. :( Hopefully it will be ok...

P.S. As for positivism and empiricism, I was under the impression that those were philosophies?

JP- From Wikipedia: "Positivism is a philosophy that holds that the only authentic knowledge is that which is based on actual sense experience."
-and their entry on empiricism says
In philosophy, empiricism is a theory of knowledge which asserts that knowledge arises from experience. Empiricism is one of several competing views about how we know "things," part of the branch of philosophy called epistemology, or "the Theory of Knowledge".

JP- What you're advocating sounds mostly like scientism: http://en.wikipedia.org/wiki/Scientism but I think positivism and empiricism are kind of similar to it.

JP- Well you said that if I get all my facts about any issue from partisan websites, that I'm getting a spin. They're not really partisan in that they support any political party, and I don't know about "spin", but you're right that the links I post here are from people that I generally share a point of view with.

MA- Nice, I'll look into Scientism and see what it is all about. I didn't know they had a name for what I was talking about, if that's what it is. :)

As for the last comment, don't forget that I made a conditional statement beginning with *if*, but you're right that I should've used better terminology. All I was saying is that I don't trust evidence delivered by political analysts, or politicians, or anyone with an agenda who interprets the data which the evidence is based, for me.

JP- If an ideology is a set of "fixed" ideas which people believe dogmatically, then isn't the belief that political decisions have to be made based on the results of the scientific method also an ideology? I'm not saying that means it's a bad or incorrect ideology, I'm just not sure if you can claim that you're not arguing based on some kind of ideology.

MA- I was expecting that:
http://stupac2.blogspot.com/2006/09/science-is-not-dogmatic.html

JP- I think this might explain some of the differences as far as how we approach political issues: http://en.wikipedia.org/wiki/A_priori_and_a_posteriori
I come at it from more of an a priori perspective. From wikipedia: A priori knowledge or justification is independent of experience (for example 'All bachelors are unmarried')
I think you take more of an a posteriori approach. From wikipedia: a posteriori knowledge or justification is dependent on experience or empirical evidence (for example 'Some bachelors are very happy')
It's very similar to the difference between deductive and inductive reasoning. I agree with the "Science is not Dogmatic" post, but I think the social sciences have to be studied differently than the natural sciences. Furthermore, I wasn't saying that the scientific method is dogmatic, but if you believe the scientific method is always and everywhere the proper way to study the social sciences, that could be considered an ideological belief. Again, that doesn't mean that it's wrong, it just means that you have an ideology based on belief in the scientific method.

MA- There are so many red flags that I wish to address in your last post, but unfortunately I have no time to reply to any of them. You either have unlimited time, or you've managed to master the art of procrastination to envious levels of virtuosity. :)

Sorry man, I was only asking for countries where there's a libertarian health care system, but we always obliterate the original premise/question with whole bunch of other stuff...

P.S. Yes, I will reply to the other post about Booker T. Washington.

JP- Well I don't have any Friday classes, plus I'm sick right now so I've been sitting around pretty much all day.

JP- Getting back to examples of free market health care: http://www.marginalrevolution.com/marginalrevolution/2004/11/seeing_is_belie.html

MA- Did you post the wrong link again? I was asking for a country. :) But I think you already answered that...

JP- No, that was the right one. I'm just showing you examples of free markets wherever I can find them, but here's an interesting article about India: http://reason.com/blog/2009/09/04/a-different-sort-of-health-car

MA- You didn't have to man. I know many examples like that, but they are not enough to convince me that cheap healthcare can be provided entirely by the free market. Especially as a student with minimal income.

And India is a great example to demonstrate the failure for the free market to provide anything even resembling to a good health coverage. You mean the same country that has, over 2 millions of people living with HIV/AIDS, who has 30 deaths per 1000 in infant mortality (75th place in the world), and has only 70 years of life expectancy (145th place)?

https://www.cia.gov/library/publications/the-world-factbook/rankorder/2156rank.html?countryName=India&countryCode=in&regionCode=sas&rank=4#in

https://www.cia.gov/library/publications/the-world-factbook/rankorder/2091rank.html?countryName=India&countryCode=in&regionCode=sas&rank=73#in

https://www.cia.gov/library/publications/the-world-factbook/rankorder/2102rank.html?countryName=India&countryCode=in&regionCode=sas&rank=145#in

JP- I didn't say India was perfect or that I'd rather live there than here. They're still a developing country and only liberalized their economy fairly recently, but they've experienced significant growth in that time. The freeing up of their markets has lifted hundreds of millions of people out of poverty and created a growing middle class.

MA- Sources?

JP- No sources, I just made everything up.

JP- jk, here they are:
http://en.wikipedia.org/wiki/Economic_liberalization_in_India

http://en.wikipedia.org/wiki/Economic_history_of_India

MA- I was about to ask what's up with the random sarcasm. :D I shall get some dinner and eat/read..

JP- As for your concern about affordability of health care for people with low income in a free market, the evidence pretty clearly shows that you're better off being poor in the US than anywhere else: http://economics.gmu.edu/wew/articles/07/poverty.html, http://economics.gmu.edu/wew/articles/98/where-poor.html
Would you rather be among the poor in one these ten countries: Hong Kong, Singapore, Australia, Ireland, New Zealand, United States, Canada, Denmark, Switzerland, United Kingdom, or one of these ten countries: Turkmenistan, São Tomé and Príncipe, Libya, Comoros, Democratic Republic of Congo, Venezuela, Eritrea, Burma, Cuba, Zimbabwe, North Korea? The first ten countries have the most economic freedom and the next ten have the least economic freedom.

JP- As you can see here: http://myslu.stlawu.edu/~shorwitz/Good/myths.htm (just the first one about the cost of living, although the other ones are well worth reading if you're interested in that stuff) things have been getting cheaper over the last few decades. This benefits the poor the most. The same phenomenon is occurring in the private sector success stories I posted above. While we do have a relative freedom in some areas compared to other countries, the government intervention we have now is what is preventing us from seeing lower prices in health care like we do with other goods and services. It's not enough to present raw data and claim "This country has lots of people with AIDS, therefore the free market is a failure". We have to recognize that no country right now is 100% socialist or capitalist. Then the challenge becomes trying to identify more specifically what does and doesn't work in each system. It's also good to have some understanding of the laws of economics, the market process, and the unintended consequences of government intervention in the market.

MA- Cut the crap and patronizing, and furthermore don't make this personal, because I am absolutely sure that while I haven't seen a doctor in 6 years (since I came to USA), this isn't the case with you. Therefore park your smug comments elsewhere. I do NOT want to rely on the emergency room to get health care in this or any country with a barbaric system such as this one.

"We have to recognize that no country right now is 100% socialist or capitalist."

More or less. Switzerland is one of the most capitalist countries in the world, yet they are intelligent to recognize that it's inhumane to let anyone make money on sick people (because the purpose then becomes to keep people sick and underinsured or uninsured, in order to make more money), and have universal healthcare.

I'm not gonna reply to any of your other previous or future points, because like I said, I am not interested in debating with ideologies - no, the scientific method is not an ideology. It's a *method*.

JP- I'm sorry, I honestly wasn't trying to make it personal and I didn't mean to offend.

JP- I'm also not trying to patronize you, I'm just trying to present my argument and evidence in a straightforward manner. I'm very much open-minded to different arguments and willing to accept the possibility that I'm wrong. I just haven't been convinced by the opposing arguments in this case.

JP- I do what I can to steer clear of namecalling, insults, and ad hominem attacks. Granted I'm not perfect, seeing as I called Rush Limbaugh an "asshole" in one of our earlier discussions, and I'm sure there are other times when I've said things in heated discussions that I later regret. However, in this and other posts/discussions you've accused people who disagree with you of being partisans, spinsters, morons, kooks, retards, liars, and racists. You've suggested that people who disagree with you are smug, want people to die quickly if they get sick, should commit suicide if they are both Republican and black, and are advocates of an "inhumane" and "barbaric" system. Given all of this, it's perplexing that you are now upset with MY tone in this discussion. I would reconsider dishing out all the insults if you can't even handle a cordial, but forceful and confident argument.

JP- I was not trying to "make this personal". You brought up the topic with your comment about being a "student with minimal income". I just wanted to make sure that I addressed your point. Remember, you criticized me earlier in this discussion for skipping part of one of your questions, so I just wanted to make sure I covered all the bases. As for the scientific method, I never stated that it is not a method. My statement was concerning when it is and isn't appropriate to use the scientific method. It certainly doesn't seem very "scientific" to me to reject someone's comments because they've seen a doctor in the last 6 years. I'm disappointed that you wont be responding because I enjoy these discussions.

----------
This is where the original exchange ends. Now my response:

MA is again confused about the role of profits in a market economy. He claims that it is "inhumane to let anyone make money on sick people (because the purpose then becomes to keep people sick and underinsured or uninsured, in order to make more money)". But as William Anderson explains:

"Doctors don’t profit from an illness; instead, they earn a profit (or have the opportunity for profit) when they attempt to help cure the illness or at least alleviate some of patient’s problems. For that matter, my mechanic does not profit because my car has broken down; he earns a profit when he tries to fix the problem so I can have my car back in good shape."

My Exchanges With A Reformer

2009-08-29T08:38:00.000-07:00

This is an exchange I had with a friend on Facebook after I commented on his status. I want preface it by mentioning that I'm not trying to be crude and disgusting when I bring up the joke "what do 9 out of 10 people enjoy? gang rape". I'm using it to make a serious point about the aggregate. Penn Jillette explains here. I'm using his initials "MA" and mine "JP". I wont mention his name, although I'm not too worried about privacy because this whole exchange was already up on Facebook for people to see.

MA Status- "Dear Old People. We don't want to kill you. You're our parents and grandparents and we love you. But if you throw a cranky fit and keep us from getting decent, affordable health care, you can figure out how to work your own goddamn PCs and cable boxes and remote controls from now on." - the internets have spoken.

JP- This doesn't really make any sense. Why would old people want their health care to be bad and unaffordable? Did it ever occur to you that these decrepit old farts might just disagree with you and have good intentions? This quote assumes that people who don't support big government hold their position because they have bad intentions. I think it's a mistake for conservatives to assume that people on the left are just a bunch of pot-smoking hippies who love Al-Qaeda and want to turn everybody gay. I think it's equally bad for liberals to assume that conservatives are a bunch of evil corporatists that are hellbent on destroying the earth and oppressing the poor, and that the only reason they're throwing a cranky fit is because they would love nothing more than to see our health care system go completely down the crapper and watch people get sick and die. (btw I understand this is supposed to be funny and I get the joke, but I still think this says something about the left's mentality.)

MA- You're killjoy, admit it and deal with it. lol. By the way, when you get old people to give up their medicare, then we'll talk, until then, your crankiness is irrelevant like the brainwashed old farts (and others) by Glenn Beck.

Enjoy:
http://www.youtube.com/watch?v=n3KIPAENlxc&feature=player_embedded
... Read More
P.S. I'll reply to your other comments later, I've been busy apartment searching these days.

MA- Also: http://media.mcclatchydc.com/smedia/2009/08/24/11/547-090823pettCOLOR.slideshow_main.prod_affiliate.91.jpg

MA- And one more: http://www.pensitoreview.com/2009/08/26/aarp-poll-86-want-universal-coverage-79-want-public-plan/

JP- Medicare has an unfunded liability of $34 trillion, which is about the same price as 30 Iraq Wars. Whether or not you like the idea of government providing health care for the elderly is immaterial. Our whole entitlement system is a huge unsustainable ponzi scheme that will eventually come crashing down.

JP- Also, I'm not really a big fan of Glenn Beck so I don't know why you think it's necessary to lump me in with him.

JP- Just because the majority supports something it doesn't mean it's a good thing (it reminds me of the joke "what do 9 out of 10 people enjoy? gang rape"). The important question here is: Why should the people get something through government–that is, at the point of a gun–simply because they want it? http://fee.org/articles/tgif/goal-freedom-healthcare-misrepresentation/ Am I supposed to feel pressured into supporting something just because the majority of the people do? It's not like I'm not used to having a minority opinion.

MA- While I think your economic views are relevant in some areas, they are irrelevant about healthcare. The free market and corporations have have demonstrated time after time that they cannot take care of people, and you can mount the counterevidence as much as you want, but it's the truth - we're not even in the top 10 for quality of care. I'll rather go back to Macedonia and get my health care from a 3rd world country, than get stuck here with a sub-par care and be in debt for the rest of my life. I didn't lump you with Glenn Beck, but most of the opposition is parroting his and Fox's views, which demonstrates that they have no idea what they're talking about.

What I'm saying is, I'll listen your arguments about making the system better, but abolishing it will never happen, no matter how many Ron Paul kooks come out of the woodwork.

JP- The government paid for an eighth of the total health care spending in 1919. Now it pays for over half of it. We've been steadily moving away from the market for nearly a century. The health insurance market is straightjacketed by government regulations. http://www.john-goodman-blog.com/are-health-insurance-companies-the-villains/#more-4600. In fact, the pervasiveness of third party payers and employer-based insurance in the US is a result of government intervention dating back to WW2. It's also important to understand the effect that restrictionist government policies (lobbied for by the American Medical Association) have had on the supply and cost of health care. http://www.forbes.com/2009/08/25/american-medical-association-opinions-columnists-shikha-dalmia.html. There are certainly problems in the US, but the data (not to mention the laws of economics) suggests that free markets are not to blame.

MA- Naturally, the free market is a wild force, and even with government regulation it still finds ways to exploit normal people, to fill its pockets. This is why we don't need corporations and businesses providing care. Health care shouldn't be for profit, just like knowledge, and safety. Read the article about open source which I posted on my wall.

JP- The profit and loss system is a crucial market mechanism which must be allowed to function if resources are to be allocated efficiently. Profits reward entrepreneurs who have directed resources to their highest-valued uses, while losses punish those who do the opposite. I hate to keep loading you up with more stuff to read because I know you're busy, but if you really want to understand the importance of profits (and why we'd be so screwed without them) this is a good article: http://www.thefreemanonline.org/featured/profit-not-just-a-motive/

MA- I'll read it later. There are some things more important than $$$.

JP- The fundamental difference between health care and knowledge is that health care deals with scarce, tangible resources. Intellectual "property" does not. In the words of Thomas Jefferson: "If nature has made any one thing less susceptible than all others of exclusive property, it is the action of the thinking power called an idea, which an individual may exclusively possess as long as he keeps it to himself; but the moment it is divulged, it forces itself into the possession of every one, and the receiver cannot dispossess himself of it. Its peculiar character, too, is that no one possesses the less, because every other possesses the whole of it. He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me."

JP- That's the big difference. The services of a doctor and the use of medical equipment are not things that can be completely used by two people at the same time. However, once an idea is out there, it's out there, and anyone can have it without taking anything away from someone else.

JP- I don't know if this whole debate is getting to be a pain in the ass for you (personally I enjoy the discussion, but I'm kind of a nerd), so if you don't care anymore and just want to stop arguing that's fine. I have a feeling this debate could just keep going until we reach the limit for comments. However, (if you want to keep going) there are a few questions I have regarding points that you've raised that I haven't responded to yet. Have you considered that the government is the "wild force" that is exploiting people to fill its pockets? How can the free market (which is a process consisting of people maximizing their utility through voluntary exchanges) be more exploitative than government intervention/regulation (which is a process consisting of one party violently confiscating the property of others and/or forcing others to act differently than they would have freely chosen)? How much freedom do we have to lose until we stop blaming our problems on an overabundance of freedom?

JP- Also, you claimed that "the free market and corporations" can't take care of people. This assumes not only that corporations have been operating in a free market, but that corporations favor a free market system. If corporations love free markets so much, then why did they donate so much to big government candidates Obama and McCain, and hardly anything to the most radically pro-capitalist candidates like Ron Paul and Bob Barr in the 2008 election? Do you think big corporations like Goldman Sachs and Citibank like the "free market"? Of course not, they like the bailouts they've gotten from Bush and Obama. That's real corporatism, and I'm against it tooth and nail.

MA- Unfortunately, I can't dedicate too much time debating each point you made, plus we're spamming everyone else who liked/commented the quote. I'll make my final point this, even though I'd like to continue talking, but the timing and the place of it all is out of whack. I believe that the government can handle health care, because if it can handle the post office (and other government run services for the people. Yes government is FOR the people). Plain and simple.
http://www.nalc.org/postal/perform/selfsufficient.html#selfsufficient

Also:
http://imgur.com/5RkJK.png

----------
This is where our original Facebook exchange ends. Now I will respond to other claims here.

The left puzzles me when it comes to concepts like monopolies and predatory pricing. If one doesn't like monopolies, it seems quite obvious to me that the worst case of a monopoly would be the one in which a firm obtains its revenue through coercion and can legally regulate and/or outlaw competition. Once again, the data (not to mention the laws of economics) suggest that the government has trouble handling the Post Office. After all, the inflation-adjusted price of a first-class stamp is today 22 percent higher than it was in 1945. We should keep this in mind when we hear that the government will be able to cut costs. As a wise man once said, "It's the Post Office that's always having problems".

As for his comment that "there are some things more important than $$$", I completely agree. In fact anyone who has ever paid money in exchange for another good or service is proving that they value said good or service more than the money they're parting with (and therefore see it as being more "important" to them). However, I'm guessing that this is not what he was getting at. I'll go out on a limb and say that he was referring to the "selfish materialism" that the free market allegedly promotes. Even if the market and the profit motive did promote selfishness, materialism, consumerism, or whatever, the laws of economics dictate that the profit and loss system is simply indispensable if we wish to maximize prosperity for the rich and (more importantly for our purposes) the poor. I eagerly await the discovery of a better system.

--------------------
This is another exchange that I had with the same person, and it actually pre-dates the above exchange. In one of my comments I posted a link to a post on this blog and claimed it was because I didn't want to squeeze my response into a Facebook comment. As you can see in these exchanges, that eventually went out the window. It started when I commented on his posting of a link to this image:

JP- This chart is misleading. According to Wikipedia (which anyone can edit, so you know its good) "Public spending accounts for between 45% th 56.1% of U.S. health care spending". This is not capitalism. As of 2004, the US was already per capita the worlds fourth biggest public-spender on health care. Also, as far as I know, none of those other countries are 100% socialist when it comes to health care, so they shouldn't be portraying as if it's completely one or the other. Plus, these life expectancy figures take into to account things like deaths from car accidents and shootings, which are more common in the US and really have no relation to how good our health care system is.

MA- Except that you forgot to mention what the spending entails. Here's the rest of the paragraph: "Government programs directly cover 27.8% of the population (83 million), including the elderly, disabled, children, veterans, and some of the poor, and federal law mandates public access to emergency services regardless of ability to pay.".

Basically what the government covers at the moment, are pretty much the most expensive patients that exist. This is not an argument against Medicare/Medicaid, it's an argument against the patients.

"As of 2004, the US was already per capita the worlds fourth biggest public-spender on health care."

Again, very misleading statement. With the exclusion of few countries like Japan and UK, most of these countries don't even come close to 83 million people population wise. Of course they will pay less - their system is based on prevention and ours isn't, which is why we end up spending so much more.

MA- "Also, as far as I know, none of those other countries are 100% socialist when it comes to health care, so they shouldn't be portraying as if it's completely one or the other."

I can agree on this, but we're talking about in general. The medical system in America is largely capitalist, and the medical systems in the countries mentioned are largely socialist.

"Plus, these life expectancy figures take into to account things like deaths from car accidents and shootings, which are more common in the US and really have no relation to how good our health care system is."

Maybe, if crime is taken into consideration. I'll check the citation, although your argument seems like it's a regurgitation from O'Reilly's bad math argument: http://scienceblogs.com/goodmath/2009/07/bill_oreilly_on_life_expectanc.php

MA- Bear with the link if you can (it pissed me off), it's tedious because the guy who wrote it spend the first half attacking Billo, and not his idiotic argument. *sigh*

I do think he addresses what you said about life expectancy though.

JP- Oh yeah, I remember that O'Reilly thing now. He doesn't make any sense there. My argument is a different one: http://medpolitics.com/content/Halderman-and-Stossel-Life-Expectancy-Statistics. I'm tired, I'll get back to you on more of this tomorrow.

MA- Lol, I was actually hoping you'll reply tomorrow, since I'm dead tired too - getting old or something. Go ahead and reply when you can, I like the fact that I learn a lot from these types of debates. :D

JP- OK, so this is a post on my blog where I link to articles that reply to common arguments that I hear about this stuff. Some of yours are in there. I didn't want to have to squeeze my response into a facebook comment.
http://guitarjeffp.blogspot.com/2009/08/health-care-arguments.html

MA- I almost forgot to reply on this. One thing about life expectancy is that you cannot exclude crime and road accidents because they happen more often. Maybe the fact that more people die from accidents/crime in USA says more about the medical personnel/system that's supposed to save them, than about the sheer numbers of them.

The link "Halderman and Stossel on Life Expectancy Statistics" you posted is by conservative republicans spinsters playing partisan politics. Find me a non-partisan source and I'll look into it.

I'm bookmarking this link and I'll reply to the rest tomorrow, hopefully.

JP- So just because a conservative says it it can't be trusted? Even then, John Stossel isn't a conservative, he's a libertarian (as am I) . He's pro-choice, anti-war, and wants to legalize all kinds of stuff like drugs and prostitution. What they're talking about is fatal injuries (you know dying on impact and that kind of stuff). Obviously if the stats included things where people went to the hospital and then died, then it's a whole different story and I'd have to throw out that argument.

MA- Conservatives, and certain types of libertarians who are vocal supporters of corporatism, provoke my inner skeptic immediately. You brought up the life expectancy argument, but you failed to provide the numbers, and instead you provided rhetoric by Dr. Linda Halderman who has written for whole bunch of far-right conservative publications, and worked for Sam Aanestad, republican senator from California.
http://www.lindahalderman.com/about_me/aboutme.htm

And John Stossel? Really? A newsman who is a global warming denier? You might as well cite Rush Limbaugh, because citing somebody who happens to be a libertarian newsman, doesn't impress me.

http://www.seekfreedom.net/x-files/sup-pres.htm

JP- Maybe Linda Halderman is a corporatist, I don't know, but I'm guessing that this is the study that she and Stossel are referencing: http://politicalcalculations.blogspot.com/2007/09/natural-life-expectancy-in-united.html. However I find it hard to believe the Stossel is a corporatist seeing as he's on the record as being opposed to corporate welfare and bailouts. It's difficult to defend "libertarians" as a generic group since everyone from Bill Maher to Glenn Beck has called themselves a libertarian, but I would argue that a true libertarian supports the complete separation of corporation and state, just like they support the separation of state from practically everything. According to Wikipedia "Corporatism has been supported from various proponents, including: absolutists, conservatives, fascists, progressives, reactionaries, socialists and theologians". Notice that libertarians are not on that list.

JP- As far as the global warming thing goes, I think it's a bad idea to dismiss everything someone says because of their position on one issue. As a defender of the free market I certainly have many differences with people like Dennis Kucinich, Ralph Nader, Cindy Sheehan, Bernie Sanders, and others who would be considered pretty far to the left. But I still respect them, and I completely support them when they speak out against war and in defense of civil liberties (or any other issues where left-liberal progressives and libertarians might happen to agree).

JP- And yes, that means that I think even Rush Limbaugh (although he's an a**hole) gets it right sometimes.

JP- Also, I wasn't citing a libertarian to "impress" you. I assumed that you were refering to both Halderman and Stossel when you called them "conservative republicans spinsters". I was just trying point out that it would be incorrect to label Stossel as a "conservative republican" seeing as he has many disagreements with the modern conservative philosophy and has been opposed to many of the republican party's policies.

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This is where our original Facebook exchange ends.

I can't believe I missed this before, but I just realized something about one of his first comments. He accuses me of being misleading when I state that "As of 2004, the US was already per capita the worlds fourth biggest public-spender on health care." Then he states that "With the exclusion of few countries like Japan and UK, most of these countries don't even come close to 83 million people population wise." Why is population relevant? Did he not see the words PER CAPITA in my comment? This is especially ironic considering the fact that he suggests I'm regurgitating Bill O'Reilly's "bad math" argument in his next comment.

I also think it's inaccurate to call John Stossel a global warming denier. According to Wikipedia, "In a 2006 discussion hosted by the Fraser Institute, Stossel stated that he accepts that global warming has occurred in the past century, presently occurs, and that it is largely due to man-made causes. He stated that the "myths" come in with the debate about proposed solutions to reduce global warming, which he argues will not solve the problem at all and will restrict people's freedom."

A Smorgasbord Of Health Care Literature

2009-08-15T15:50:00.000-07:00

A Four-Step Healthcare Solution - Hans-Hermann Hoppe
The Real Right to Medical Care versus Socialized Medicine - George Reisman
Socialized Healthcare vs. The Laws of Economics - Tom DiLorenzo
Why Obamacare Can't Work: The Calculation Argument - Gabriel E. Vidal
Debating the President’s Portsmouth pitch - Keith Hennessy
Sweden's Government Health Care - Walter Williams
Affordable Health Care - Walter Williams
Are There Really 47 Million Americans Who Can’t Afford Health Insurance? - Dominick T. Armentano
Prescription for Disaster - Peter Schiff
Double Whammy - Peter Schiff

much more later...

Health Care Arguments

2009-08-15T15:10:00.000-07:00

"American businesses are at a competitive disadvantage when they have to pay for health care and foreign companies don't." Wrong.

"More preventive care will save money." False.

"It's the Post Office that's always having problems." How'd that get there? I thought we were talking about health care, not the Post Office (although I'd have to agree with it). I wonder who said that...

"It's unnacceptable and disgraceful that 47 million Americans don't have health insurance." Take a closer look at the numbers.

"The status quo is unsustainable for families, businesses and government." Yeah, it is.

"Insurance companies are making record profits." Nope.

"Government will help control costs, eliminate waste, and be more efficient." Are you f&%#ing kidding me?!

""We" have to do something about health care." What do you mean "we"?

"Expensive devices like CAT scans and MRIs drive up the cost of health care." This claim simply doesn't make sense if you understand what a "cost" is.

"Unregulated markets don’t work for health care — never have, never will" Not so fast! In the real world markets do work.

"Health care is a right" You can't have a right to something someone else produces. Didn't your mom ever tell you that it's wrong to take what doesn't belong to you?

More will be added to this post later.

The Microeconomic Foundations of Macroeconomic Disorder: An Austrian Perspective on the Great Recession of 2008

2009-06-29T13:11:00.000-07:00

Steven Horwitz
Charles A. Dana Professor of Economics
Department of Economics
St. Lawrence University
Canton, NY 13617
Tel (315) 229-5731
Fax (315) 229-5819
Email sghorwitz@stlawu.edu

Modern neoclassical macroeconomics has taken on the air of what John Kenneth Galbraith decades ago termed “the conventional wisdom.” In particular, since Keynes, the economics profession has taken for granted a broad vision of macroeconomics that looks for the explanations of both booms and busts in the movements of various aggregate variables. The whole sub-discipline of “macroeconomics” is premised on the belief that the standard microeconomic tools are not of much use in understanding the dynamics of growth and business cycles. Even with the rational expectations revolution purporting to set macroeconomics back on microfoundations, the language of aggregate supply and demand, over-simplified versions of the Quantity Theory of Money, and the aggregative analytics of the Keynesian cross and simple models of functional finance still fill the textbooks and inform most policy debates. As we find ourselves in a significant recession that none of these models foresaw, nor seem to be of much help in extracting ourselves, other approaches to macroeconomics have an opportunity to fill the explanatory vacuum. The Austrian school is uniquely positioned to fill that gap, as Austrians have long rejected the fundamental assumptions of modern macroeconomics and have developed an alternative approach to business cycles and economic growth that sheds a great deal of light on the current recession as well as suggesting ways to prevent future boom-bust cycles.

Austrians and Modern Macroeconomics

For Austrians, the start of economic analysis is the human actor trying to figure out what his ends are and how best to deploy his means to achieve them, but doing so in a world where his knowledge is fragmentary and often inarticulate and where the future is clouded by genuine, structural uncertainty. From the start, these preclude the use of standard neoclassical assumptions about rationality and self-interest. Austrians are not interested in describing the equilibrium outcomes of fully-informed individuals and firms maximizing their utility and profits respectively. Such pictures of the world are useful, at best, as contrasts to the ways in which real-world humans attempt to peer through the fog of uncertainty to better deploy their means for their desired ends, whether that is a single person engaging in economizing behavior or a firm searching for profits. All human action is, for the Austrians, speculative and entrepreneurial in that there is no assurance of success and genuine error and regret are possible (unlike neoclassical models where the best decision possible given the data at hand is assumed to be made).

This depiction of human action translates into a conception of the market process. As individuals attempt, in Mises’s (1966) words, to “remove their felt uneasiness” by better deploying their means toward their desired ends, they have several options. First, they can engage in exchange and give up lesser-valued means for higher-valued ones. Exchange is mutually beneficial ex ante as both parties imagine they are being made better off by the trade, even if ex post they turn out to have erred. Such simple exchanges improve the subjective well-being of individuals or households, and as the inconveniences of barter take their toll, eventually traders discover the use of a medium of exchange. Monetary exchange brings with it the evolution of distinct money prices for each good, which in turn enables traders to more clearly calculate the gains and losses of various activities.

Money prices are also crucial to the second way in which people can improve their position: They can engage in roundabout processes of production. Rather than trade consumption good for consumption good, actors can gather together a variety of inputs and create a new output with them. This can be as simple as constructing a tool or as complex as producing automobiles. Carl Menger (1981 [1871]), the founder of the Austrian school, recognized the importance of intertemporal production by distinguishing between goods of the “first order,” or direct-consumption goods, and goods of the “higher orders,” or capital goods that contribute to the production of first-order goods. In the Austrian vision, individuals see opportunities to improve their future consumption possibilities by consuming less now and using some of those resources to “finance” multiple-stage production processes that will provide more output in the future. It is our current savings (i.e., the reduction in current consumption) that makes it possible for us to wait for the larger future output. Savings, for the Austrians, is the vehicle for long-run growth as it makes possible more roundabout processes of production.

Producers make their decisions about what to produce and how to produce it based on the signals provided to them by current prices and their judgments about what will be wanted in the future. This is the essence of entrepreneurship. Producers purchase raw materials, machinery, or other higher-order goods, as well as labor, and combine them to produce output that they believe can be sold at a price that exceeds the cost of the inputs plus the implicit interest rate required to wait for the output in the future. Because humans, all other things equal, prefer the present to the future, the fact that production takes time means that the value of the final good must exceed not just the monetary costs of the inputs but also the value of the time the production takes. For Austrians, therefore, the interest rate plays a key role as the central price guiding intertemporal production. At lower interest rates, which reflect more patience on the part of consumers, production processes with more stages of production (i.e., those with more steps between raw materials and the final output) will be relatively more worthwhile, while higher interest rates and consumer impatience will make shorter processes relatively more desirable. The crux of the matter is the degree of intertemporal coordination, or the degree to which the roundaboutness of production plans are synchronized with the preferences of consumers for more or less consumption in the present or the future.

This conception of production and consumption has an important implication for how capital is understood. In neoclassical analyses, capital is normally treated as a homogenous aggregate; it is “K” in various models. This is a crucial error from an Austrian perspective. Because capital is, for the Austrians, always embodied in specific goods, it cannot be treated as an undifferentiated mass. Entrepreneurs purchase inputs or build machines that are designed for specific purposes. They cannot be costlessly redeployed to an infinite number of other uses the way the homogenous conception of capital might suggest. Austrians see capital as heterogeneous and having a limited number of specific uses (Lachmann 1978 [1956], Kirzner 1966). The same is true of labor. The skills and knowledge workers have are not appropriate for all potential production processes, thus their human capital can be conceived of as heterogeneous and specific to a limited number of uses.

Capital is not only heterogeneous in this sense, it also might embody error. Given an uncertain future, producers are always making their best guess as to what to produce and how, so the range of capital goods in existence at any moment is likely to embody a variety of entrepreneurial errors. For example, if two producers buy up the inputs to produce a particular kind of running shoe, but the demand is only sufficient for one to be profitable, then the capital of the other has been misallocated. Of course, we cannot know that until the market process unfolds and the one firm’s losses indicate that the value of their final product was not sufficient to cover costs including interest. This point is important because it implies that we cannot just add up the value of existing capital to get some aggregate measure of “total capital.” That procedure would only be valid in equilibrium where we knew that each higher-order good was deployed correctly. We cannot add up existing stocks of capital to get some aggregate. In thinking about capital, we must pay attention to both where the capital (and labor) sit in the structure of production and factors that might distort price signals in ways that make it more difficult for firms to synchronize their production with the public’s preferences about consumption.

The Austrian approach to macroeconomics can already be seen as being fundamentally microeconomic. What matters for growth is the degree to which microeconomic intertemporal coordination is achieved by producers using price signals, especially the interest rate, to coordinate their production plans with the preferences of consumers. However, this coordination process can be undermined through economy-wide events that might well be called “macroeconomic.” In particular, the very universality of money that makes possible the coordination that characterizes the market process can also be the source of severe discoordination. If there is something wrong with money, the fact that it touches everything in the economy will ensure that systemic “macroeconomic” problems will result. When money is in excess or deficient supply, interest rates lose their connection to people’s underlying time preferences and individual prices become less accurate reflectors of the underlying variables of tastes, technology, and resources. Monetary disequilibria undermine the communicative functions of prices and interest rates and hamper the learning processes that comprise the market.

More specifically, Austrians have offered a theory of the business cycle that brings together the themes outlined above. According to the Austrian theory, the boom phase of the business cycle is initiated when the central bank attempts to supply more money than the public wishes to hold at the current price level. As these excess supplies of money make their way into the banking system, lenders find themselves able to provide more loans even though they have seen no increase in saving from the public. Central bank open-market operations add to their reserves in a way indistinguishable from private deposits. This increase in the supply of loanable funds (note that “loanable funds” need not equal “private saving”) drives down interest rates as banks move to attract new borrowers. These lower market rates of interest appear to signal to firms that the public is now more patient and more willing to wait for consumption goods. Had the expansion of loanable funds been financed by genuine savings, the lower interest rate would be sending an accurate signal about the public’s wishes. However, when the expansion is caused by an excess supply of money rather than a shift in the public’s time preferences, the tight relationship between market rates of interest and underlying time preferences is broken.

The lower interest rate signals to producers that the public is more willing to wait; they therefore engage in longer-term processes of production, i.e., ones that have more stages between raw materials and final, consumer good. Longer processes are more productive, which is why they are desirable to producers, and the lower interest rate makes it economically rational to stretch out production in this way. Capital goods are created or purchased and refit to engage in these longer processes. Labor is bid away from markets closer to final goods and toward earlier stages of production. Prices and wages are bid up, and as Garrison (2001) argues, the economy can, at least temporarily, exceed its production possibilities frontier because, as we shall see, the projects being financed by the monetary expansion are ultimately not sustainable even as they create all the observed measures of a boom in the meantime. The boom cannot last because the underlying preferences of consumers have, in fact, not changed and they are, in fact, not willing to wait longer for output. So even as producers are shifting resources from producing goods for current consumption to earlier-stage goods, consumers continue to demand current goods with the same relative intensity as they did before the monetary expansion. The inflation-driven lower market rate of interest is sending out a false signal about the public’s preferences.

The intertemporal discoordination becomes evident as a tug-of-war erupts between the attempts by some producers to purchase inputs for longer production processes, while others continue to bid up input prices for goods closer to consumers. Both groups cannot be successful given the realities of the resources available. Eventually, those producers engaged in the longer processes find the cost of inputs to be too high, particularly as it becomes clear that the public’s willingness to wait is not what the interest rate suggested would be forthcoming. These longer-term processes are then abandoned, resulting in falling asset prices (both capital goods and financial assets such as the stock prices of the relevant companies) and unemployed labor in those sectors associated with the capital goods industries. So begins the bust phase of the cycle, as stock prices fall, asset prices “deflate,” overall economic activity slows, and unemployment rises. Key to the bust is the specificity of capital and labor noted earlier. The abandoned capital goods associated with the longer production processes cannot be instantaneously and costlessly converted over to new uses in the consumption goods sectors. The same is true of labor: Unemployed workers must find their way into the particular sectors closer to final consumption where labor is needed, and they will likely take a loss in income in the process and may even require a different set of human capital to be successful. The bust is the economy going through this refitting and reshuffling of capital and labor as it eliminates the mistakes made during the boom. For Austrians, the boom is when the mistakes are made and it is during the bust that those mistakes are corrected.

Standard aggregative macroeconomics is not very helpful in understanding the process Austrian cycle theory describes. Most fundamentally, if GDP is conceived in terms of C+I+G, the idea that consumption and investment might trade off is difficult to comprehend. When investment is treated as an undifferentiated quantity, rather than the Austrian “stages of production” approach, the whole notion of intertemporal discoordination and the problems raised by heterogeneous capital are also impossible to see. The ways in which artificially low interest rates distort the composition of “I” rather than affecting the total quantity are obscured in the mainstream approach, yet are central to the Austrian understanding of the errors of the boom and the corrective process of the bust. Keynesian and later models that do not understand investment decisions, and the capital goods they lead to, in terms of the specific best guesses of a whole series of microeconomic entrepreneurs will find it difficult to understand the distortive effects of artificially low interest rates. Hayek recognized this as early as his review of Keynes’s Treatise on Money, when he wrote, “Mr. Keynes’ aggregates conceal the most fundamental mechanisms of change” (Hayek 1995 [1931], p. 128). Over 75 years later, that sentence remains a very pithy summary of the Austrian critique of not just Keynes, but of the whole class of models from a variety of schools of thought that comprise modern, post-war macroeconomics. For Austrians, there are indeed macroeconomic questions, but there are only microeconomic answers.

Austrian Macroeconomics and the “Great Recession” of 2008

Austrian macroeconomics can offer a fairly comprehensive explanation of where we find ourselves in the current recession. One core concept in the Austrian approach is that although theoretical propositions are universally valid, they provide only the framework of a full historical explanation. In applying theory to specific historical episodes, Austrians recognize that the particular details of each episode may vary in important ways, even as the outlines of the episode conform to the pattern identified by the theory. In applying the Austrian cycle theory to specific historical episodes, therefore, the economist must pay close attention to the other kinds of factors in play that might have led to this particular episode’s unique features.

The Austrian cycle theory emerged out of empirical data on the patterns of resource use and disuse that characterized 19th- and early 20th-century business cycles. That the capital goods industries expanded during booms and contracted during busts was an empirical observation that demanded explanation in any theory of the cycle, and the Austrians believe they had provided it. Common explications of the Austrian theory normally make the claim that the excess loanable funds created by the central bank will find their way into producers’ hands who will use them invest in longer-term processes of production, as argued earlier herein. However, that claim is not a necessary feature of the cycle, rather a common one, especially in years past. Depending on the set of policies, institutions, and incentives in place, the excess of loanable funds could end up in a number of specific places, although all of them will be ones where the lower interest rate makes longer-term economic activity less costly.

In current recession, a series of such factors diverted the excess supply of loanable funds into the housing market, creating an asset bubble there that served as the basis for a set of ill-conceived financial instruments, all of which are now collapsing in the wake of the bursting of the housing bubble. The “Great Recession” is not a product of the greed of laissez-faire capitalism, rather, it is the unintended consequence of a pair of very significant interventions into the operation of the market process: the Fed’s expansionary monetary policy and a set of policies that artificially reduced the costs and risks of homeownership, enabling the creation of highly risky loans which themselves then led to even riskier innovations in the financial industry. From an Austrian perspective, the eventual collapse of this house of cards built on inflation represents not a failure of capitalism, but a largely predictable failure of central banking and other forms of government intervention. To the details of this process we now turn.

The empirical evidence on various measures of the money supply and related interest rates makes quite clear the ways in which the U.S. Federal Reserve System drove up the money supply and drove down interest rates since 9/11, if not earlier. This was very intentional policy on the part of the Greenspan Fed as it attempted to pull the U.S. economy out of the small post-9/11 recession. The Federal Funds rate fell to the 1 percent range for a period and stayed well below recent historic norms for much of the period prior to 2007. It is also worth noting the role played by the so-called “Greenspan Put.” The Fed chair had made it clear that he believed that the central bank could do nothing to prevent the development of asset bubbles, but that it could cushion the effects when such bubbles burst. What is notable is that Greenspan seemed ignorant of the role the Fed might play in causing such bubbles as well as the incentives this policy created for investors, who now knew that they would be, at least partially, saved from any losses they might suffer due to a collapsing bubble. The latter surely had a role in making financial markets feels as though there was no downside risk to the housing-related instruments developed during the boom.

For these inflationary funds to fuel a housing bubble and financial sector-driven boom more generally, government policy had to play an additional role. A state-sponsored push for more affordable housing has been a staple of several recent U.S. administrations. At least since the Clinton Administration, the federal government has adopted a variety of policies intended to make housing more affordable for lower and middle income groups and various minorities. Among the government actions, those dealing with mortgage market government-sponsored enterprises were central. Fannie Mae and Freddie Mac are the key players here. Although they did not originate many risky mortgages themselves, they did develop a number of the low down-payment instruments that came into vogue during the boom. More important, they were primarily responsible for the secondary mortgage market as they purchased mortgages from others and promoted the mortgage-backed securities that became the investment vehicles du jour during the boom.

Both Fannie and Freddie are not “free-market” firms. They were chartered by the federal government, and although nominally privately owned until the onset of the bust in 2008, they have been granted a number of government privileges, in addition to carrying an implicit promise of government support should they ever get into trouble. With such a promise in place, the market for mortgage-backed securities was able to tolerate a level of risk that truly free markets would not. As we now know, that turned out to be a big problem. It is true that the problematic loans that were at the bottom of all the current recession were generated by banks and mortgage companies and not Fannie and Freddie. However, their presence as “Big Players” in the mortgage market dramatically distorted the incentives facing those truly private actors. Their willingness and ability to buy up mortgages originated by others made private actors far more willing to make risky loans, knowing they could quickly package them up and sell them off to Fannie, Freddie, and others. Fannie and Freddie had both various government privileges and the implicit promise of tax dollars if need be. This combination enabled them to act without the normal private sector concerns about risk and reward, and profit and loss. Their relative immunity from genuine market profit and loss sent distorting ripple effects through the rest of the mortgage industry, allowing the excess loanable funds coming from the Fed to be turned into a large number of mortgages that probably never should have been written.

Other regulatory elements played into this story. Fannie and Freddie were under significant political pressure to keep housing increasingly affordable (while at the same time promoting instruments that depended on the constantly rising price of housing) and extending opportunities to historically “under-served” minority groups. Many of the new no/low down-payment mortgages (especially those associated with Countrywide Mortgage) were designed as responses to this pressure. Throw in the marginal effects of the Community Investment Act, which required lenders to serve those under-served groups, and zoning and land-use laws that pushed housing into limited space in the suburbs and exurbs and driving up prices in the process, and you have the ingredients of a credit-fueled and regulatory-directed housing boom and bust. This variety of government policies and regulations was responsible for steering this particular boom in the direction of the housing market. Unlike past booms where the excess of loanable funds ended up as credit to producers, this set of unique events that accompanied this boom was responsible for channeling those funds into housing.

The boom in the housing market drove prices to unprecedented levels. Those inflation-fueled rising housing prices enabled other parts of the financial industry to develop new instruments that took the mortgage payments of borrowers as a flow of income that could be parceled out among investors. The variety of fancy instruments that comprised the secondary mortgage market were all premised on the belief that housing prices would continue to rise, thereby enabling subprime borrowers to continue so see rising equity, which in turn would enable them to afford their payments. If housing prices were to fall, and subprime borrowers find themselves with mortgages greater than the value of their homes, it would in turn dry up the whole flow of income and bring these other instruments down like the houses of cards they were. Of course, this is exactly what happened when the boom finally came to an end, as the housing industry found itself increasingly unable to find the resources it needed to build houses at prices that would be profitable and the flow of credit began to dry up. Once housing prices began to fall in 2006, the entire chain of investments built upon those rising prices was under threat. The stock market’s large drop in the fall and winter of 2008–09 reflected the growing realization that the bust was underway and that the future earnings prospects of most firms had dimmed.

The shrinkage of the housing and construction industries led those sectors to shed jobs and dramatically reduce investment in capital. The financial firms that began to bleed resources as their housing-dependent assets began to collapse in value also began to shed jobs and capital. These losses in employment and income have led to dropping demand throughout the rest of the economy. In addition, the losses of equity value in homes along with the declines in the value of retirement accounts and other investments caused further shrinkage in demand as households began to try to recoup through savings some of their lost wealth and/or saw absolute losses in investment income. All of these events together have led to the declines in the various macroeconomic indicators that we associate with recession.

From the Austrian perspective, the current recession has many features of the typical boom-bust process associated with the school’s theory of the business cycle. The central bank fueled an unsustainable expansion of the economy that eventually would reveal itself leading to a bust that would begin to try to correct those mistakes of the boom. This recession, however, had some unique characteristics about it that were due to a whole host of government interventions and policies in the housing and financial sectors. The Austrian theory predicts that excess credit will flow to long-term production processes. In this case, that was housing, as the lower interest rates from the Fed’s expansion artificially reduce the price of housing and led to the sequence of events we have outlined. As noted in the prior section, the Austrian theory does not attempt to predict the specific path inflation will take, only that it will generally conform to the pattern whereby it ends up in long-term investments as a result of lower interest rates. That in this case it went into housing is a particular feature of this cycle that is completely consistent with the more typical features the theory identifies. Inflation by the government central bank, along with other government interventions and policies, account for both the typical and unique features of this cycle and are the direct causes of the current recession.

Can Policy Cure Recessions?

Given the Austrian diagnosis of the problem, what does the theory recommend as the cure? Because the theory argues that government was responsible for the boom that produced the bust, it will not be surprising to find a great deal of skepticism about the ability of government to extract the economy from the mess it created. In fact, Austrian economics takes it as a very strong rule of thumb that governments should refrain from intervening in the corrective process of the recession. Even if there were some number of things government might do to help the situation, we cannot ignore the question of whether political actors have the incentive to do those things and only those things once we concede their role in the recovery. More fundamentally, however, Austrians do not believe that even well-motivated political actors can know exactly what policy steps would be needed to produce a true recovery. This argument emerges out of the claim that intertemporal discoordination that manifests as a “macroeconomic” failure is ultimately a whole series of failures at the microeconomic level. Therefore, attempting to correct those failures would involve both identifying where they occurred and knowing what the superior allocation of resources would look like. Given the Austrian emphasis on markets as processes for discovering just this kind of knowledge, their general policy recommendation is to allow markets to figure out where the errors are and where resources would be better used.

The first point can be dispatched with fairly quickly. The history of various stimulus and recovery programs does not suggest that governments can limit themselves to only those sorts of expenditures and policies that mainstream theory, assuming for the moment it is correct, suggests will be helpful. Once we open the door to political intervention as key to the cure, politicians will gladly make that an excuse to propose and pass a whole variety of items, regardless of whether they fit the economist’s model of a pump-priming stimulus. The debate over the Obama Administration’s stimulus package in the United States revealed just this sort of concern, as did the ensuing debate over his proposed budget. In both cases, the claim was made that these expenditures were necessary for economic recovery, yet a substantial portion of those expenditures, particularly the emphasis on health care, education, and the environment in the budget, have no known relationship to economic models of recovery. This is a precedent set by the Roosevelt Administration during the Great Depression, when even Keynes was moved to note that many of its proposals seemed more like “reform than recovery.” Even if theory suggested that government should have a significant role in recovery, the institutional incentives of the political process are such that it would be very difficult to limit government to just that role. When governments overreach, not only do they create additional costs (e.g. debt) that might offset any imagined gains, they can also retard private recovery by adopting policies that pose long-term threats to private property rights or that are constantly changing course. Both of these will create what Robert Higgs (2006) has termed “regime uncertainty” and has blamed for the length of the Great Depression.

This argument, however, is a mere sideshow for the Austrians. The more fundamental point is that even theory suggests that government can contribute little or nothing to the recovery process. The crux of the matter is that mainstream approaches to recovery are overly focused on macroeconomic aggregates such as consumption, investment, and unemployment, which obscure the adjustment processes at the heart of the Austrian conception, which have to do with the reallocation of resources among sectors at the microeconomic level. Developing policies that will “create jobs” or substitute aggregate net government spending for perceived insufficiencies of aggregate consumption or investment from the private sector is to not even ask the sorts of questions the Austrian theory suggests.

Recall that the core of the Austrian story is that the inflationary boom attracts both capital and labor toward the early stages of production as the artificially low interest rate makes longer-term projects look more profitable. As consumers continue to spend in their old patterns, in contradiction to what the interest rate seems to be saying they should do, industries closer to final consumption see demand staying constant and have to now out-bid producers in the early stages for various resources. For a period of time, as we noted earlier, this can drive the economy beyond its sustainable production possibilities frontier, as unemployment goes below the natural rate and capital owners use inputs with excessive intensivity. The bigger point is that both capital and labor are misallocated among the various sectors, with capital in particular being “malinvested” in the earlier stages of production. The Austrian theory is often wrongly termed an “overinvestment” theory. It is true that there is “overinvestment” for a short period of time, but the real problem is that resources are “malinvested.” Traditional aggregates may not show any change in the total level of investment even as resources are misallocated between the earlier and later stages of production.

The downturn in economic activity we associate with the recession is, on the Austrian view, the economy attempting to shed capital and labor from where it is no longer profitable. Because markets are discovery processes that take place through real, historical time, and because human actors have fragmentary knowledge, moving those resources to where they will be more productive cannot happen instantaneously. Entrepreneurs at the earlier stages of production will idle capital and labor as their profitability shrinks. Entrepreneurs at the later stages will now have to consider whether to purchase new capital or hire new labor. They may well have to wait until prices and wages fall sufficiently to make the purchases worthwhile. They may also have to wait until workers can learn where the new opportunities are, and possibly get retrained, much as some capital might have to be refit to be valuable at the later
stages.

This adjustment process takes time, but also requires the skillful judgment of entrepreneurs across the economy about whether idled labor or capital can be profitably redeployed. Here too, it is not a matter of being too much or too little capital or labor, but capital or labor that is not suitable for a particular stage of production in a particular production process. The Austrian emphasis on the heterogeneity of capital (and labor) is central here, as capital cannot be costlessly and instantly reallocated from the early stages to the later stages as one might conceive it could be on the mainstream view of capital as an undifferentiated aggregate. The same can be said of government spending and investment of course, as simply assuming that substituting G for I in the sum that comprises national income overlooks the shifts in capital and labor that would require, as well as the comparative efficiency of the two different lines of expenditure. The problem to be solved is not a matter of boosting aggregate measures of consumption and investment through any sort of government expenditure. The problem is ensuring that existing resources get reallocated away from sectors that were artificially stimulated by the boom to those sectors where consumers now wish to spend. Seeing the importance of the movement among the stages of production requires a different conception of capital and the production process, and one that moves away from a focus on statistical aggregates toward one that takes time and human plans seriously.

The policy conclusion is that only those located in the context of the market have the knowledge and the feedback processes to ensure that this reallocation process takes places as quickly and effectively as possible. Government expenditures, even if we take out the inevitable politicization of the process, will never match the ability of the market to discover where the excesses were and where the current demand is. That sort of microeconomic discovery process is precisely why Austrians have long argued against more expansive visions of government intervention and planning, and those arguments hold with equal force in times of macroeconomic disorder. It is not accidental that the modern Austrian emphasis on the epistemological advantages of the market grew of Hayek’s participation in the two great debates of the 1930s: the socialist calculation debate and the debate with Keynes. The lessons of the former are also clearly evident in the latter.

Government actors must refrain from the huge temptation to step in and attempt to speed up the recovery process. Both theory and history suggest that doing so will be counter-productive and only slow the market’s attempts to recover from the excesses of the boom. For the Austrians, the boom was the time the mistakes were made and the bust is the market’s way of correcting them. Interfering with that subtle and complex correction process is beyond the ability of government. Only the decentralized decision-making and learning processes of the market can accomplish the millions of corrections that have to take place in myriad individual microeconomic markets.

Is the Austrian perspective then left with a “do nothing” approach to recessions? At the level of “stimulus” packages and similar sorts of specific policy interventions, the answer would be “yes.” But in two other ways the answer is “no.” First, saying that government should do nothing is hardly the same as saying “we” should do nothing. In fact, recovery from recession depends upon active and creative entrepreneurship on the part of millions of economic actors. The Austrian perspective argues that it is they who should be “doing something.” However, that perspective also recognizes that government policymakers cannot know what it is that all of those actors should do, so for the entrepreneur-driven recovery process to happen quickly and effectively, policymakers must refrain from interfering with that process and also take steps to ensure that policy creates a stable and predictable environment in which those entrepreneurs can operate. The primary objective for policymakers should be to minimize Higgsian regime uncertainty and thereby facilitate the countless individual adjustments that are necessary for recovery to take place.

The second Austrian solution is a longer-term institutional one. At the root of the Austrian analysis is the ability of central banks to inflate without economic penalty and thereby set in motion the events of the cycle. For this reason, a number of Austrians have long argued for changes in the institutions of banking that would eliminate central banks and allow privately-owned banks to issue currency competitively and enable banks to develop interbank institutions such as clearinghouses to perform a variety of important functions that such institutions performed before they were abrogated by central banks. Such a move to a “free banking” system would put an end to the inflation that generates the boom and bust cycle and causes recessions and depressions. It would also break the link between government spending and monetary policy that often uses inflation as a way to monetize debt. As the stimulus plans endorsed by much of the profession continue to drive up the burden of government debt across the world, the temptation toward monetization will continue to grow. Unfortunately, should governments succumb to that temptation, it will only set in motion yet another chain of events that will create another, and possibly worse, boom and bust cycle. Separating money production from the state is the key institutional change that Austrians see as necessary not so much to recover from the current recession but to prevent future, possibly worse, ones.

Conclusion

Austrians themselves refer to their conception of the microeconomic market process as the factor that distinguishes them as a school of thought from the neoclassical orthodoxy (Kirzner JEL). Elements such as uncertainty, fragmented knowledge, heterogeneous capital, and the epistemological role of prices all matter for understanding macroeconomic phenomena as well, as Austrians see such phenomena as ultimately microeconomic in their causes and effects. It is the distortion of interest rates (which are prices) through expansionary monetary policy that initiates economy-wide disorder, and other government interventions in the market process will steer that disorder in particular directions. Finally, the Austrian conception of the market process provides reasons to be deeply skeptical of government stimulus programs as the appropriate solution to the very disorder that prior intervention has created. All of these microeconomic elements are on display in the Austrian understanding of the current recession and the appropriate ways to respond to it. Macroeconomic aggregates still, as Hayek wrote almost 80 years ago, conceal the most fundamental processes of change, and that observation provides the Austrians with their alternative, microeconomic, conception of the boom and bust cycle.

My Favorite 'Cheating Death With Dr. Stephen T. Colbert D.F.A.' Side Effects

2009-06-20T09:08:00.000-07:00

Late onset albinoism, Mild kidney explosions, Testicular cranberrying, Rectal hallucinations, Pulminary weevils, Autonomous nipple syndrome, Genital migration, Prolonged erections... but not where you’d hope, Tracheal meercat colonies, Involuntary Narnia adventures, Testicular myopia, Warlock hump, Thoracic geysers, Tennis Scrotum, Pituitary ferns, Skeletal xylophoning

I Know...

2009-06-09T18:49:00.000-07:00

Posts have fallen off a cliff... I guess I've just lost that bloggin' feeling. It comes in waves, maybe I'll start up again later.

I'm So Ashamed...

2009-04-23T08:54:00.000-07:00

but I find this show really funny.

RENO 911!

Wednesdays 10:30pm / 9:30c

Workin' It - Internet and E-Mail

comedycentral.com

Joe Lo Truglio

Funny Cop Videos

Like Elevators On The Titanic

2009-04-07T19:55:00.000-07:00

This new article on AIER has a great analogy (or metaphor, I don't remember which one) that describes the worldwide fiat currency system we currently have:

"Like elevators on the Titanic, some currencies are going up and some are going down, but all are sinking."

If Anyone Ever Tells You That Excessive Saving Caused This Meltdown...

2009-04-04T20:44:00.000-07:00

...Please refer them to this chart:

Sheldon Richman Interview

2009-03-30T17:27:00.001-07:00

Behind The Sounds of Pet Sounds

2009-03-29T17:21:00.000-07:00

Wouldn't It Be Nice

You Still Believe In Me

That's Not Me

Don't Talk (Put Your Head On My Shoulder)

I'm Waiting For The Day

Let's Go Away For A While

Sloop John B.

God Only Knows

Another Scary Picture

2009-03-26T17:01:00.000-07:00

What Would Mises Say?

2009-03-25T20:57:00.000-07:00

A good article on Mises.org about our current situation and what the most brilliant economist of the 20th century would have said about it. I'm about 650 pages in on Human Action right now, just started the chapter about the nonhuman factors of production. Exciting stuff, read it!

This Is Why I Love The Free Market

2009-03-22T11:07:00.000-07:00

Sony Releases New Stupid Piece Of Shit That Doesn't Fucking Work

The Bailouts So Far

2009-03-21T09:36:00.000-07:00

Here's The Sitch

2009-03-20T09:26:00.001-07:00

This comes from someone I follow on Twitter: "Congress shovels $182.5 billion dollars into the AIG furnace, then heroically recovers 0.09% of it for taxpayers."

Holy Shit

2009-03-18T20:36:00.000-07:00

George W. Bush: Still Making An Ass Of Himself

2009-03-18T06:17:00.000-07:00

I guess I shouldn't be surprised. He made an ass of himself "before he arrived in president" and "during he arrived in president", why not "after he arrived in president"? According to James Bovard, Bush says he is planning to write a memoir so that there's an "authoritarian voice saying exactly what happened".

George W. Bush's Horrendous Spending Record

2009-03-17T20:48:00.001-07:00

Peter Schiff's Excellent Speech At The Austrian Scholars Conference

2009-03-17T20:33:00.000-07:00

Important Reading For Today

2009-03-16T15:50:00.000-07:00

With the Keynesian resurgence sweeping the globe today, it's important to know how misguided Keynesianism really is.

Scary Stuff

2009-03-14T22:44:00.000-07:00

Great medical records roundup; the beginning of in-depth surveillance horrors?

How Little Things Have Changed Since 1951

2009-03-13T14:06:00.000-07:00

"The majority of the voters are just dull and mentally inert people who dislike thinking and are easily deceived by the enticing promises of irresponsible pied pipers. Subconscious inferiority complexes and envy push people toward the parties of the Left. They rejoice in the policies of confiscating the greater part of the income and wealth of successful businessmen without grasping the fact that these policies harm their own material interests. Disregarding all the objections raised by economists, they firmly believe that they can get many good things for nothing.

Even in the United States, people — although enjoying the highest standard of living ever attained in history — are prepared to condemn capitalism as a vile economy of scarcity and to indulge in daydreams about an economy of abundance in which everybody will get everything "according to his needs.""

~Ludwig von Mises, The Political Chances of Genuine Liberalism

China ‘Worried’ About Safety of U.S. Treasuries

2009-03-13T06:18:00.000-07:00

I'd be worried too.

The Astonishing Greatness Of Inequality

2009-03-12T21:00:00.000-07:00

When free markets create wealth, regardless of how wealthy one individual becomes, someone else is also better off. In a market in which new technologies are emerging at unprecedented rates, we would expect that those on the frontier of those technologies would experience extraordinary incomes. For some that income has been astronomic. The billionaires of those industries have had an unbelievable impact—directly and indirectly—on virtually everyone in the world. The benefits they’ve created for the present generations and for future generations are immeasurable, but, undoubtedly, they would add up to many times more than all the billions earned by the richest of the rich. If we experience as many breakthroughs in the next fifty years as we’ve seen in the past fifty, we can expect to see a continued increase in the number of billionaires, pushing the highest quintile of wealth to even higher levels, while granting all of us the benefits of those breakthroughs.

Those in the lower quintiles will continue to increase their wealth as well, since the upper quintiles can’t gain without pulling the other quintiles up with them—wealth begets wealth, as discussed earlier. Still, as the number of billionaires increases, many egalitarians will moan about “how sad that is,” while in reality, the greater the number of billionaires, the better off we all will be, collectively. The wealth of billionaires represents revolutionary ideas that come from exceptional individuals who push technology, create and facilitate markets, invent ways to increase productivity, or entertain us in new ways.

Some of these superstars will create benefits for us that future generations will enjoy many centuries after their creation. Imagine what we have already gained and what our descendants will continue to gain from the talent of one exceptional man: Ludwig van Beethoven. How much would he be owed today if we were to compensate him for all the joy he has given us over time and will continue to give us in the future? Imagine our lives today without the incredible creations of Alexander Graham Bell, Guglielmo Marconi, the Wright brothers, Henry Ford, Jonas Salk, or Bill Gates. These people represent those who have deeply enriched our lives and deserve our deepest gratitude.

We often hear that those who have earned great wealth should “give something back,” as though they had taken something from society. Such resentful notions stem from the misconception of how wealth is earned. Contrary to such notions, those of wealth have not taken anything from society, but, in fact, have given to society an amount of wealth that far exceeds the amount they have earned.

~Taken from Inclined To Liberty by Louis Carabini

Cool Stickers

2009-03-09T05:34:00.000-07:00

I'm not really the bumper sticker type, but If I was I'd get one of these.

SMiLE - Purple Chick Mix

2009-03-07T12:33:00.000-08:00

Broken Window Anyone?

2009-03-06T13:28:00.000-08:00

Obama touts stimulus at ceremony for Ohio police recruits while unseen destroyed jobs go unnoticed.

Saving

2009-03-06T09:02:00.000-08:00

The Assault On Saving ~ Henry Hazlitt
Save Us From Government Spending ~ Sheldon Richman
Consumers Don't Cause Recessions ~ Robert Murphy
Nothing Paradoxical About Thrift ~ Robert Murphy
Economic Recovery Requires Capital Accumulation, Not Government "Stimulus Packages" 'Saving' and 'Hoarding Versus Saving' ~ George Reisman
Money and Capital; Saving and Investment ~ Ludwig von Mises
Is Saving Bad For The Economy? ~ Frank Shostak
Why Economists Need to Speak the Language of the Marketplace ~ James C. W. Ahiakpor

Peter Schiff On "Change" And The Lost Credibility Of The Republicans

2009-03-06T08:28:00.000-08:00

Stephen Colbert pretty much nailed it last night when he described the Republican Party:
"The vacuum in Republican leadership has allowed a mean-spirited, lard-ass talk radio mind-corpse to become de facto leader, which is turning an already crippled party into a bickering laughing stock"

This is why the Republicans will have no success in trying to beat back Obamanomics.

Strong Words For Obama

2009-03-03T20:20:00.000-08:00

Host: Isn't is at all encouraging though to you that after this initial stimulus spending according to Obama and his administration he does hope to cut that budget down to $500 billion and change?

Ron Paul: I don't know how anybody can talk that way with a straight face, and they do. The president did and members of congress do, and I don't know whether they brainwash themselves or what, but the odds of cutting the deficit in half by running up a deficit of 1 or 2 trillion dollars is beyond me. It's a fairy tale, it's just silliness.

These People Are Nuts!

2009-03-03T11:17:00.000-08:00

Bob Herbert Contradicts Himself

2009-03-03T09:39:00.000-08:00

Bob Herbert has a good column today about our endless wars in Iraq and Afghanistan. Here's a quote:

"We invaded Afghanistan more than seven years ago. We have not broken the back of Al Qaeda or the Taliban. We have not captured or killed Osama bin Laden. We don’t even have an escalation strategy, much less an exit strategy. An honest assessment of the situation, taking into account the woefully corrupt and ineffective Afghan government led by the hapless Hamid Karzai, would lead inexorably to such terms as fiasco and quagmire.

Instead of cutting our losses, we appear to be doubling down.

As for Iraq, President Obama announced last week that substantial troop withdrawals will take place over the next year and a half and that U.S. combat operations would cease by the end of August 2010. But, he said, a large contingent of American troops, perhaps as many as 50,000, would still remain in Iraq for a “period of transition.”

That’s a large number of troops, and the cost of keeping them there will be huge. Moreover, I was struck by the following comment from the president: “There will surely be difficult periods and tactical adjustments, but our enemies should be left with no doubt. This plan gives our military the forces and flexibility they need to support our Iraqi partners and to succeed.”"

However, I figured that he is probably quite Keynesian in his economics, and sure enough on the first page of his archives I found an article where he advocated government spending to help the economy:

"The Republicans still don’t get it. Most act as if they don’t understand that in this radical economic downturn the demand for goods and services has fallen off a cliff, and that government spending is needed — and needed quickly — to replace a large portion of that lost demand.

The goal is twofold: to alleviate some of the enormous suffering (something that is easily understood if you have a heart), and to revive the battered economy (equally easy to understand by anyone with a brain).

Senator John McCain echoed many of his Republican colleagues on Friday when he indignantly asserted, “This is not a stimulus bill; it is a spending bill.”

It was an objection that had been addressed by an incredulous President Obama on Thursday night. “What do you think a stimulus is?” the president asked, his voice rising. Spending, he said — to laughter from his audience — “is the whole point.”"

Now what I don't understand is if spending is what we need, and World War II was the just the public works project to stimulate the economy out of the Great Depression, why should a Keynesian want to end the wars? They should want to expand the war to fill the huge gap in aggregate demand right?

It don't make no sense to me

This Could Be Us

2009-03-03T06:38:00.000-08:00

We're Not Really Leaving Iraq, Why Don't People Get It?

2009-03-02T18:59:00.000-08:00

Eric Margolis- U.S. influence in Iraq far from over
Ivan Eland- Opposing view: Read the fine print

Why can't we just get the hell out of there?

Robert Murphy Ties The 'Paradox Of Thrift' To A Tree And Bashes It With A Shovel

2009-03-02T15:06:00.000-08:00

Don't let anyone tell you that your saving is hurting the economy.

Paul Krugman Should Read Bob Murphy

2009-03-02T07:44:00.000-08:00

Paul Krugman's latest blames our crisis on savings (even with no economic training, wouldn't that still intuitively sound stupid?). Too bad for him, Bob Murphy already debunked this argument a few months ago in this "prebuttal", if you will.

Freedom Watch 2/25/09

2009-03-01T08:16:00.000-08:00

Haha, the Judge apparently didn't know that he has a Facebook...

Ron Paul Can't Stand Presidential Speeches Either

2009-02-28T22:14:00.000-08:00

I had to leave about halfway through Obama's address to the congress because I couldn't take it anymore. Turns out Ron Paul finds them so unbearable that he doesn't even go to them anymore.

More of Ron Paul on Washington Unplugged:

7 Fallacies Of Economics

2009-02-25T15:00:00.000-08:00

William Anderson on 7 Fallacies of Economics by Lawrence W. Reed
Introduction
The Fallacy of Collective Terms
The Fallacy of Composition
The Fallacy of Money is Wealth
The Fallacy of Production for Its Own Sake
The Fallacy of the Free Lunch
The Fallacy of the Short Run
The Fallacy of Economics by Coercion

Want To Understand What Your Crazy Libertarian Friend Is Thinking?

2009-02-22T16:51:00.000-08:00

Read this book.

Sign Up For The Schiff Report Video Blog

2009-02-21T21:10:00.000-08:00

Tom Woods At Penn State

2009-02-21T20:42:00.000-08:00

This is a great explanation of what happened, and what is going to happen with the "stimulus".

President Obama Are You Listening?

2009-02-20T04:30:00.000-08:00

Freedom Watch 2/18/09

2009-02-19T06:35:00.000-08:00

Another Austrian On TV

2009-02-15T05:20:00.001-08:00

Robert Higgs on Economic Stimulus Package

Holy Christ!

2009-02-15T05:13:00.000-08:00

Federal obligations exceed the f@#%ing world GDP!

What It Feels Like To Be A Libertarian

2009-02-14T18:17:00.000-08:00

Political analysts frequently consider what it means to be a libertarian. In fact, in 1997, Charles Murray published a short book entitled "What It Means to Be a Libertarian" that does an excellent job of presenting the core principles of libertarian political philosophy. But almost no one ever discusses what it feels like to be a libertarian. How does it actually feel to be someone who holds the principles described in Murray’s book?

I’ll tell you. It feels bad. Being a libertarian means living with an almost unendurable level of frustration. It means being subject to unending scorn and derision despite being inevitably proven correct by events. How does it feel to be a libertarian? Imagine what the internal life of Cassandra must have been and you will have a pretty good idea.

Imagine spending two decades warning that government policy is leading to a major economic collapse, and then, when the collapse comes, watching the world conclude that markets do not work.

Imagine continually explaining that markets function because they have a built in corrective mechanism; that periodic contractions are necessary to weed out unproductive ventures; that continually loosening credit to avoid such corrections just puts off the day of reckoning and inevitably leads to a larger recession; that this is precisely what the government did during the 1920's that led to the great depression; and then, when the recession hits, seeing it offered as proof of the failure of laissez-faire capitalism.

Imagine spending years decrying federal intervention in the home mortgage market; pointing out the dangers associated with legislation such as the Community Reinvestment Act that forces lenders to make more risky loans than they otherwise would; testifying before Congress on the lack of oversight and inevitable insolvency of Fannie Mae and Freddie Mac to legislators who angrily respond either that one is "exaggerat[ing] a threat of safety and soundness . . . which I do not see" (Barney Frank) or "[I[f it ain’t broke, why do you want to fix it? Have the GSEs [government-sponsored enterprises] ever missed their housing goals" (Maxine Waters) or "[T[he problem that we have and that we are faced with is maybe some individuals who wanted to do away with GSEs in the first place" (Gregory Meeks) or that Fannie Mae and Freddie Mac are "one of the great success stories of all time" (Christopher Dodd); and arguing that the moral hazard created by the implicit federal backing of such privately-owned government-sponsored enterprises is likely to set off a wave of unjustifiably risky investments, and then, when the housing market implodes under the weight of bad loans, watching the collapse get blamed on the greed and rapaciousness of "Wall Street."

I remember attending a lecture at Georgetown in the mid-1990s given by a member of the libertarian Cato Institute in which he predicted that, unless changed, government policy would trigger an economic crisis by 2006. That prediction was obviously ideologically-motivated alarmism. After all, the crisis did not occur until 2008.

Libertarians spend their lives accurately predicting the future effects of government policy. Their predictions are accurate because they are derived from Hayek’s insights into the limitations of human knowledge, from the recognition that the people who comprise the government respond to incentives just like anyone else and are not magically transformed to selfless agents of the good merely by accepting government employment, from the awareness that for government to provide a benefit to some, it must first take it from others, and from the knowledge that politicians cannot repeal the laws of economics. For the same reason, their predictions are usually negative and utterly inconsistent with the utopian wishful-thinking that lies at the heart of virtually all contemporary political advocacy. And because no one likes to hear that he cannot have his cake and eat it too or be told that his good intentions cannot be translated into reality either by waving a magic wand or by passing legislation, these predictions are greeted not merely with disbelief, but with derision.

It is human nature to want to shoot the messenger bearing unwelcome tidings. And so, for the sin of continually pointing out that the emperor has no clothes, libertarians are attacked as heartless bastards devoid of compassion for the less fortunate, despicable flacks for the rich or for business interests, unthinking dogmatists who place blind faith in the free market, or, at best, members of the lunatic fringe.

Cassandra’s curse was to always tell the truth about the future, but never be believed. If you add to that curse that she would be ridiculed, derided, and shunned for making her predictions, you have a pretty fair approximation of what it feels like to be a libertarian.

If you’d like a taste of what it feels like to be a libertarian, try telling people that the incoming Obama Administration is advocating precisely those aspects of FDR’s New Deal that prolonged the great depression for a decade; that propping up failed and failing ventures with government money in order to save jobs in the present merely shifts resources from relatively more to relatively less productive uses, impedes the corrective process, undermines the economic growth necessary for recovery, and increases unemployment in the long term; and that any "economic" stimulus package will inexorably be made to serve political rather than economic ends, and see what kind of reaction you get. And trust me, it won’t feel any better five or ten years from now when everything you have just said has been proven true and Obama, like FDR, is nonetheless revered as the savior of the country.

~John Hasnas
Associate Professor
McDonough School of Business
Georgetown University

Original here.

Jon Stewart The Disguised Dictator

2009-02-12T16:49:00.000-08:00

The Daily Show With Jon StewartM - Th 11p / 10c

Daniel Sperling

Daily Show Full Episodes
Important Things With Demetri Martin

Funny Political News
Joke of the Day

I like the Daily Show, and I know he was probably joking, but when he said "consumers will do what I tell them" I couldn't help but be reminded of some Mises quotes about socialism. Actually the whole interview reminded me of these...

"The writings of the socialists are full of such utopian fancies. Whether they call themselves Marxian or non-Marxian socialists, technocrats, or simply planners, they are all eager to show how foolishly things are arranged in reality and how happily men could live if they were to invest the reformers with dictatorial powers."
~Ludwig von Mises

"Every socialist is a disguised dictator."
~Ludwig von Mises

Our Enemy, Inflation

2009-02-11T20:43:00.000-08:00

Tom Woods - Monetary Lessons from America's Past

Mark Thornton - Skyscrapers and Business Cycles

Robert Higgs - Death Fuel

Ron Paul - End the Fed

Lew Rockwell - The Gold Dollar

Tom Woods (And Burt Folsom) On Glenn Beck

2009-02-11T20:17:00.000-08:00

It's good to see Austrians other than Ron Paul and Peter Schiff getting on TV.

Obama’s War In Iraq May Be Longer Than Bush’s War In Iraq

2009-02-11T19:06:00.000-08:00

Does everyone with this bumper sticker feel stupid yet?

The Daily Show With Jon StewartM - Th 11p / 10c

Thomas Ricks

Daily Show Full Episodes
Important Things With Demetri Martin

Funny Political News
Joke of the Day

Excellent Video On Oil Prices And Inflation

2009-02-11T08:05:00.000-08:00

Dr. Paul's Walls

2009-02-11T05:21:00.000-08:00

Yikes

2009-02-10T20:09:00.000-08:00

I Have The Answer!

2009-02-10T09:03:00.000-08:00

"Most economists, almost unanimously, recognize that even if philosophically you're wary of government intervening in the economy, when you have the kind of problem we have right now -- what started on Wall Street goes to Main Street, suddenly businesses can't get credit, they start carrying back their investment, they start laying off workers, workers start pulling back in terms of spending -- when you have that situation, that government is an important element of introducing some additional demand into the economy. We stand to lose about $1 trillion worth of demand this year and another trillion next year. And what that means is you've got this gaping hole in the economy."
~Barack Obama, Feb. 9 2009

Ok, so legalize counterfeiting so I can print up a trillion dollars real fast and fill this gaping demand hole. I'd be more than happy to do it. It's just that simple!

Spiral Theory

2009-02-10T08:49:00.001-08:00

This is a great article on the incorrect "spiral theory" that Barack Obama appears to believe in.

Good Thing Barack Doesn't Listen To These Crazy People

2009-02-09T20:44:00.000-08:00

Obama's Press Conference

2009-02-09T17:11:00.000-08:00

I can't believe he just cited Japan's lost decade in his argument for stimulus. Now he's bashing those crazy FDR-haters. Infuriating.

MELTDOWN!!!!!!!

2009-02-07T17:27:00.000-08:00

Get the book! Tell your friends! Download the free chapter!

Campaign For Liberty Videos

2009-02-07T17:08:00.000-08:00

I see a lot of comments about how the "C4L" videos don't look as professional as they could, and I understand what they're saying. However, whenever I see things like this I am always reminded of the words of Charles Péguy:

"Tyranny is always better organized than freedom".

Screw You Barack

2009-02-06T12:29:00.000-08:00

You're just as bad as Bush was with the Patriot Act.

Today's FEE Timely Classic Must Be Old

2009-02-04T11:06:00.000-08:00

Those poor Chinese...
"The people of China and India are not poor because they are stupid; they are not poor because they lack natural resources; they are not poor because they lack modern industrial tools. They are poor because they have lived for decades under social systems in which the established, entrenched classes are able to use law and custom to control the production, price, and sale of all goods and services produced."

Economics Question

2009-01-28T13:30:00.000-08:00

This is from my macro class.
The question:
If real domestic product = $3000 B, real planned consumption = $2000 B, planned investment = $400 B, planned government purchases = $400 B, planned exports = $400 B, and planned imports = $100 B, then the real unplanned inventory investment must be:
a. -$400 B
b. -$100 B (correct answer)
c. $0
d. $100 B
e. $400 B

The equation he used to explain the answer
Real Domestic Product($3000 B) = Real Planned Expenditures($3100 B) + Real Unplanned Inventory Investment(-$100)

So this is supposedly good for the economy because the greater amount of demand and/or spending causes firms to increase production. I understand this point, but if I follow the logic of these kinds of equations I can't escape the conclusion that the economy would perform best if we all spent everything and saved nothing. Where am I wrong?

Ron Paul Is ON FIRE In This One

2009-01-28T08:49:00.000-08:00

"We Won The Election. We Wrote The Bill."

2009-01-28T08:41:00.000-08:00

That's right Nancy Pelosi, and it also means that it is your fault when the economy is still in the crapper 4 years from now.

Freedom And Power

2009-01-24T15:39:00.000-08:00

Sheldon Richman is quickly becoming one of my favorite writers. On his blog he poses a interesting question: If people can't be trusted with freedom, how can they be trusted with power?

President Obama

2009-01-21T11:00:00.000-08:00

Weird to finally see this... I thought the Bush nightmare would never end. But the Obama nightmare could be even worse! Hopefully he'll at least close Guantanamo.

Hahaha

2009-01-19T19:42:00.000-08:00

Two Good Anti-War Articles

2009-01-19T09:18:00.000-08:00

On the eve of the inauguration of President Keynes, Justin Raimondo points out how as we get poorer, our celebrations become more lavish. Also, John Basil Utley puts forth a convincing case that Bin Laden is actually winning. The end of this article contains the most effective rebuttal I've heard to the claim that "Bush kept us safe".

22

2009-01-15T17:33:00.000-08:00

I turned 22 on January 4th, and I feel pretty insignificant when I compare myself to what my heroes were doing at this age. Bob Dylan released Freewheelin' on the same month he turned 22. John Lennon started recording Please Please Me when he was still 22. Paul was 22 when A Hard Day's Night came out. Brian Wilson was writing songs like "Please Let Me Wonder", "Let Him Run Wild", "Help Me Rhonda", and "California Girls" at 22. Mick Jagger was just about to turn 22 when the Stones released "Satisfaction", and when he did turn 22 he followed that up with "Get Off My Cloud", 19th Nervous Breakdown", and "Paint It, Black". Keith is a few months younger than Mick. Angus Young was working on the riffs for Let There Be Rock and Powerage. Elvis was in his 1957 prime, and just about to get drafted. There are probably a lot more examples I could find, but I'm getting depressed.

Do It Peter!

2009-01-12T18:56:00.000-08:00

Send Chris Dodd packing in 2010!

Three Must-Reads

2009-01-10T15:29:00.000-08:00

Bob Murphy with A Less Immodest Proposal, Sheldon Richman tearing apart the New Deal, and Bob Higgs on the intellectual bankruptcy of mainstream economics.

George Reisman On Deflation And Falling Prices

2009-01-10T15:19:00.000-08:00

George Reisman is always worth reading, and his latest blog post is no exception.

This Is What The Free Market Is All About!

2009-01-10T12:29:00.000-08:00

Finally...

2009-01-09T20:00:00.001-08:00

A bailout I can get behind.

Unemployment At 7.2%? Big Deal

2009-01-09T09:01:00.000-08:00

7.2% would be an improvement.

The Party Is Over

2009-01-08T09:41:00.000-08:00

Who will buy our debt now?

When Did Rounding Up People You Don't Like In Your Country And Putting Them In Camps Get A Bad Name?

2009-01-07T20:18:00.000-08:00

The Colbert ReportMon - Thurs 11:30pm / 10:30c

Better Know a District - Utah's 3rd - Jason Chaffetz

Colbert at Christmas
Colbert Christmas DVD

Green Screen
Bill O'Reilly Interview

I Remember My First Beer, I Mean, Econ. Class

2009-01-06T09:06:00.000-08:00

I just started my first college economics class yesterday. After the first class was over, I went up to the professor and said, "are you a Keynesian". He said "yes". I said "I will defeat you", shoved all of his stuff off his desk and gave him the finger as I walked out. First impressions are important.

OK, that didn't happen at all.

Brian Wilson Is A Better Economist Than Paul Krugman

2009-01-05T08:18:00.001-08:00

Paul Krugman believes in the blessings of destruction, seeing as he has always said that WWII was a big stimulus package for the US economy. The new Brian Wilson album proves that you don't even have to be an economist to be a better economist than Paul Krugman, as evidenced by this lyric in the song "Oxygen To The Brain":

"Never destroy when you can create"

Seems like a pretty simple concept to me.