poniedziałek, 8 sierpnia 2011

Collectivist Big Bang

Mainstream economists say they adhere to scientific method and empiricism just like, say, physicists. That would indeed give higher credibility to their theories. On the other hand, Austrians claim scientific method is not applicable in economics as there is no repeatability here. In other words you can't build a lab where you can test if socialism works better than capitalism, all other things being equal. There are factors like culture or available natural resources that may easily render a socialist country considerably richer than capitalist one, even though the former is considerably worse, all other things being equal.

In theory it is true, but I don't think it is that bad. Actually, collectivists themselves have built quite a lab in Korea. I believe this satellite photo does prove capitalism works better than socialism. Hard core communists still disagree though. One has explained that hard working people of North Korea actually go to sleep at night rather than waste their money in capitalist whore houses...

But are physicists really the scientific ideal? Those capable to actually use scientific method indeed are. But let's look at astrophysics and Big Bang theory in particular. Everyone has heard the story, it is part of the common consensus among mainstream physicists, just like Keynesian theory is among mainstream economists. Like Austrians, astrophysicists who reject Big Bang theory face academic ostracism. You might think they are all the Bermuda Triangle like crackpots. Halton Arp, with Ph.D. by Caltech doesn't sound like one though. And look at the signatories of Cosmology Statement in 2004.

The reason is, scientific method is just not applicable in astrophysics. What we can observe is merely a snapshot of a process that lasts at least billions of years. We can't create a lab where we could repeatedly (or even once, for that matter) create artificial universes and see how they evolve. Precisely same situation as with economics. Of course, scientific method is not the only way to figure out things in this world. There is also something called reasoning. Yeah, good old logical thinking.

Unfortunatelly reasoning is not too popular in a collectivist world where science projects are financed by taxpayers. Much more important is the ability to convince politicians and the common Joe that their taxes are being properly spent. Hence mainstream economists prefer the Keynesian idiocy because politicians and taxpayers like it. But why would the common Joe prefer expanding universe to the static one? Simple, because the common Joe believes God has created our universe at some definite point in the past. Note how popular even Creationism is with its retarded idea that God has created the world 10,000 years ago! Moderate common Joes can easily accept even 13.75 billion years if only to protect their religious minds from having to grapple with a never-ending static universe.

Big Bang's acceptance by ignorant masses and virtually all religious groups explains a lot, but there's even more important factor. Here's a quote from The Static Universe (2010) by astrophysicist Hilton Ratcliffe:

More than 90% of cosmological agents in Big Bang Theory are supernatural, unprecedented, and invisible.


The root of the current crisis in science is that we physicists so easy and completely belive that the mathematical component in our education endows us in some mysterious way with a deeper and more profound understanding of nature. I don't believe it does. It is my firm conviction that nothing in astrophysics except quantities need be expressed in mathematics exclusively, and surely, nothing belongs solely to unapproachable elite. In conversation with Virginia Trimble, eminent astrophysicist Rocky Kolb summarised the challenges of cosmology like this:
Our goal must not be a cosmological model that just explains the observations, the ingredients of the cosmological model must be deeply rooted in fundamental physics. Dark matter, dark energy, modified gravity, mysterious new forces and particles, etc, unless part of an overarching model of nature, should not be part of a cosmological model. We may propose new ideas, but they must wither unless nourished by fundamental physics.
Whoa! Can you believe this? How can mainstream economics and astrophysics have exactly same problem on such a fundamental methodological level? Why do they keep developing complex mathematical models with fairy tale assumptions and agents? Why laws we can observe in our everyday lives are supposedly no longer applicable when we discuss the universe or national economy? Ans: public financing...

wtorek, 26 lipca 2011

The Rich Get Richer And The Poor Get Poorer

The myth is based on the US gini coefficient increasing by about 10% since WWII. However people fail to realize that capitalism has actually created the middle class in the first place, so it is absurd to criticize capitalism for any gini coefficient increases. Without capitalism it invariably becomes close to 1, like in historically feudal or contemporary communist states, with rich government elite and the rest dismally poor.

But if capitalism is not to blame, then what is? What has been happening since WWII in the US which could explain the rich getting richer and the poor getting poorer? Let's see:


Wow, US government spending as percentage of GDP also increased by 10%... And that little only by ignoring the most recent war spending surge... Hmmm, why, isn't government spending supposed to be a boon for the poorest?

The increased spending must have been supported by some popular ideology. You must have surely heard about Keynes' widespread popularity among economists, politicians and intellectuals in the second half of 20th century. And how Keynesians want to help the poorest? By printing new money of course. Sometimes in a very roundabout ways, via government deficit spending (oh yeah, government spending) and increasing government debt, which, sooner or later, has to paid off somehow. How? No problem. Government does not even need to collect taxes. And they are right, government can always simply print money.

Now let's see how the system works in practice. Is the new money really helping the poor? New money usually gets created out of thin air by private financial institutions in our system of fractional reserve banking. A central bank needs only to make its interest rate low enough and boom, expansion of cheap credit begins. Nowadays interest rates are even lower than inflation rate, so you make money just by borrowing. But can anyone do that? Like the poorest? No, the privilege happens to be reserved only to the richest. Well, otherwise the whole system would break down in a matter of months... And it actually does, like in the most recent crisis when also the poorest were invited to get tons of cheap money via NINJA loans.

But the most recent Keynesian craziness apart, among your friends, who's got the biggest mortgage? The poorest one? No, the wealthier an individual, the bigger their mortgage, as simple as that. Same with companies, owned in turn by wealthy individuals. The bigger a company, the higher leverage it can obtain from financial markets. The wealthiest individuals and the biggest corporations are the biggest debtors out there.

And why are they so much in debt? Because it pays. Because loans are subsidized by ultra low rates thanks to new money, ie by inflation tax, ie by the poorest, as they are the biggest cash holders and on salaries fixed in nominal terms. How often do you get raises? Once a year, to offset previous year's inflation, if you are lucky. However, there is inflation every single month of that year before your get your raise.

Sure, truly wealthy people may not have to take mortgages but they take them anyway because they make money that way by investing their cash. Every financial advisor will keep badgering you into that. Similarily, why pay off your mortgage earlier if you can invest that cash with higher interest than your mortgage?

Then again if you buy a $1 million dollar house, are you wealthy? Not necessarily, usually you are just well paid and can afford a big mortgage. Still leftists often call such guys wealthy. And indeed higher middle class is wealthier than the poorest who subsidize their big mortgage ultra low rates via inflation tax. The system benefits most the richest, but you have to give some benefits to the higher middle class too. After all, they are the intellectuals who can make or brake the masquerade. And the poorest who actually pay? Don't worry, too ignorant, just give them some socialist pep talk and they will happily treat inflation as a moral obligation to help the country ;)

Now as for those corporations that are indeed creditors. You probably think of financial institutions like banks and that is correct, except they lend money they have created out of thin air in the first place. Every time you deposit a $100 bill in your bank, the bank is licensed to create exactly same amount (minus small reserve requirement of a couple percent) of new money and lend it. Yes, financial institutions are creditors but of a money they have stolen, via inflation tax, from the poorest in the first place. That is how the fractional reserve banking, best in tandem with Keynesian policies, works....

There is no better scheme to make money on the back of the poorest.. but then nothing has changed really, even before Keynes, when someone was calling himself a benefactor of the poor, the poor had better run and fast. However that does not really matter. Keynesianism, together with fractional reserve banking, has kept financial sector average profits consistently and considerably above economy average since WWII. Politicians powerful as ever. Legions of economists hired (private institutions like banks) trying to forecast what in turn another legions of economists will do with inflation tax (public institutions like central bank etc). Keynesianism will always be popular with government, financiers and economists as there are simply no better sinecures out there than economy tsars.

niedziela, 8 maja 2011

Cylons of Collectivism

As is most often the case, Mike Huben's post was my inspiration, this time about altruist robots.

Now, neither Rand nor libertarians are obviously against altruism proper. They are merely against forced altruism (collectivist altruism?) which is indistinguishable from slavery run by parasites.

Altruists are as natural as parasites (apart from, obviously, producers) and both will inevitably arise during evolution process, be it natural or artificial. But it gets really interesting with the emergence of conscious thought and ideas, when parasites start to cloak their true motives under the guise of altruism. In other words, there always are charity volunteers and thieves, but what happens when thieves develop an ability to pose as altruists using clever ideas? Note the parasites do not even need to be conscious of that. In fact, to achieve the highest efficiency, they should not be aware of that, same as skin-job Cylons on the Colonial Fleet. They should rather believe wholeheartedly they are the good guys. After all, parasites have to convince producers they are altruists. There have always been con men, but we are talking nationwide, even worldwide scheme that involves up to billions of human beings. This is a tall task you need dedicated men for, men which actually believe what they preach. In short, you need ideas at least as strong as those that make religious fanatics commit suicide for the cause.

Hence the eternal fight between parasites and producers also starts to affect the higher level of ideas. Parasites can obviously never win completely because they would then die out too (like say in Pol Pot Cambodia), no matter what level they are working on. But can libertarians ultimately win the battle of ideas by proving to Cylons of Collectivism (using logical reasoning based on self-evident assumptions, like those of Mises and Rothbard) what they really are? Evolutionary-wise, highly doubtful. Note the general rule has always been, the less parasites there are, the more beneficial it is to be one. So no, we will never eliminate parasites by showing them what they are. Even if we do decrease their amount temporarily (like in late 18th and early 19th century thanks to classical liberals), evolutionary process will simply create more sophisticated parasites with ideas even more cleverly disguised as altruism (marxism of late 19th century, 20th century liberalism etc).

No, there is no other way than to give ideological tools to producers so they can recognize parasites on their own. In short, at least people's majority need to become libertarian before we get rid of collectivist parasites for good.

Can you imagine Mike Huben's feelings when he watches Battlestar Galactica now? But then again, he should not feel too bad, as he is no less natural than a producer or true altruist is. Cylon of Collectivism simply happens to be his evolutionary part, but it could have been any one of us.

piątek, 29 kwietnia 2011

Adolescent Collectivists

For Michael Gerson there is one simple explanation for Objectivism: adolescence.

Many of us experienced a few unfortunate years of invincible self-involvement, testing moral boundaries and prone to stormy egotism and hero worship.

Michael obviously seems to know what he is talking about. Either himself or many of his friends and family must have been egotistic, self-involved and immoral hero worshippers during their youth. So basically what we are dealing here with is a social circle of JOCKS.

Usually one grows out of it, eventually discovering that the quality of our lives is tied to the benefit of others.

Unfortunatelly, Michael hasn't grown out of it. When jocks discover they can no longer beat up people without going to jail, they do seek alternative ways of abuse. Soon they discover political means to do so, ie collectivist ideologies, which give them a moral right to force other people into servitude. Thus, a jock eventually joins one of the strands of modern collectivism, be it religious, conservatist or liberal. In theory their sport heroes get replaced by either God, Nation or Society. In practice however they all worship Government as the hero that forces other people to serve their goals. So no wonder Michael must obviously hate Rand's moral commandment never to sacrifice others to himself. He rants against "selfishness" so that at the end of the day he can enjoy a society molded and bullied by his hero Government. A society where our lives become "tied to the benefit of" Michael Gerson and the like.


sobota, 9 kwietnia 2011

The Whitest Kids U' Know

WKUK is a very talented group, especially Trevor Moore, I love him. Some brilliant sketches. Here are basically the best out of the first three seasons, some are simply hysterical:

Bad Panda, Brain Tumor, Heaven, Opposite Day, Mall Bitches, Ten Easy Steps to Have a Perfect Relationship, Girl Sympathy, Moon Bears, 911 Call, Joining The Army, Ninja School, Accidental PukeCall Of Duty, GandalfGrapist, Throw Up Employee, EarthquakeAccidental Puke, White Castle CheesburgerSummer Vacation Story, Gallon of PCP, Get a New Daddy, Saturday, Good Morning Dad, Happy Birthday, Line Leader, Take My Face Off, The Never SongTrevor Talks To Kids, Whiskey, Dinosaur Rap, God Says Song

Now down to business. WKUK is pretty liberal. Which is usually good for comedy. Conservative biased shows are rarely funny. There are outstanding exceptions like It's Always Sunny in Philadelphia, but liberals are usually the open minded ones. Take Sniper Business. Pretty funny sketch (not nearly as funny as some of the above though). WKUK tells us business is like a war. Funny, but false. Precisely zero people die and rarely any assets are destroyed when a company goes bankrupt. Rather, people change jobs and assets get reallocated to more efficient uses. Actually, business is precisely the opposite of war. It happens to be the one and only way for society to increase its standard of living. However yes, free market competition does not guarantee life employment and eternal status quo. Sorry, that is reserved for Heaven.

So I have nothing against funny liberal sketches, but then Backseat killed me. I have never seen anything so explicit in a comedy group before. It's not much of a sketch really, but a detailed recap of WKUK political views:

If you think about it, socialism's not really that bad. Yeah, I guess you're right. It's kind of like, being really nice and fair. If you think about it, socialism's like everybody helping everybody else out and capitalism's like greed. It's weird. It's like the only reason capitalism works is because it plays on man's biggest flaw. It's almost like, if you really work on developing your soul and being a good person, capitalism is constantly throwing obstacles in your way. Yeah, it's like the principles that every single religion teaches are directly opposed to the principles of capitalism.

Now, we know the guys are brilliant. As such they are another example for Bread & Butter, my very first post. I admire WKUK. But then, the guys are retarded, at least as far as economics goes.

Going backwards, the last sentence: Yeah, it's like the principles that every single religion teaches are directly opposed to the principles of capitalism. Of course they are! Socialism is a religion with God replaced by Society, another abstract being that does not exist in reality. No one has ever talked with Society except prophets of socialism, who seem to know in detail what Society's needs are. How is that different with God prophets? We had Industrial Revolution 200 years ago when capitalism was invented, and not 10,000 years ago (or whatever) when first religions were. WKUK guys do seem to be aware of religion pitfalls in God Says Song. Still, no clue, no idea how to connect the dots.

It's almost like, if you really work on developing your soul and being a good person, capitalism is constantly throwing obstacles in your way. I agree it should be as easy as possible to be a decent person. But then, as Einstein has said, you should try making everything as simple as possible, but never simpler. It is fallacious to believe there can exist a system which makes it easier to produce than to steal. Laziness is easier than productivity, sort of fundemental thing in our universe, no matter what solar system you are on, if you think about it.

If you think about it, socialism's like everybody helping everybody else out and capitalism's like greed. It's weird. It's like the only reason capitalism works is because it plays on man's biggest flaw. No, in real (not fairy tale) socialism you have to pay bribes or be close friends to get anything done, because no one has financial motivation to work. Defrauding the company you work for is pretty much okay (each is sort of worker owned, at least in theory), so if you work at a toilet paper company, you steal toilet paper and barter with other guys who, say, work in a grocery or butcher's shop etc. But this is all redundant in capitalism. You don't need other people to love you or bribe them to provide you with goods and services you need. You simply pay them using goods you've previously earned by offering your own services and goods to yet other parties, money working as an intermediary. You don't eliminate greed by eliminating capitalism. Rather you merely eliminate the only non-violent and honest method of cooperation (ie helping everybody else out) between strangers.

If you think about it, socialism's not really that bad. Yeah, I guess you're right. It's kind of like, being really nice and fair.

I mean, really, you should take Heaven and replace Suicide with Socialism there.

środa, 23 marca 2011

Libertarian Heavens On Earth And Beyond

Hugo Chavez claims capitalism has ended life on Mars. He fails to understand that, according to liberal reasoning, Mars is ultra capitalist even now. The reasoning goes like this. Libertarians hate government, right? There is no government in Somalia, right? Hence, Somalia is libertarian. Mars? Even more libertarian.

Sounds good superficially, same as any liberal retarded reasoning. We have to look at the starting liberal assumption again. Do libertarians really hate government? After all, aren't they complaining about government programs all the time? Calling government evil? The less government the better?

No. In fact, libertarian state would have the strongest government imaginable. Libertarians do not hate government as such. Libertarians hate government aggression, that is when it infringes on private property rights. Government programs are government aggression because they are financed from taxes. Some may be unavoidable, but we should always strive to reduce their number to a minimum. Hence, libertarian minimal state. However libertarians would actually increase government programs that protect private property rights if need be, like police, courts and the army. Unless I guess we finally manage to privatise them, but even then the overriding goal should always be private property rights protection. Libertarian state is the strongest one imaginable because its only purpose in life is to protect citizens' private property. Its whole might would be directed at this one single purpose, rather than dispersed among thousands of disparate programs rendering contemporary government a lobbyist heaven.

So there is no libertarian paradise neither on Mars nor in Somalia. There are actually many other countries that are pretty close to Somalia, like Haiti, most African, basically all third world countries. Their governments either do not exist or are too weak to protect private property rights. Sure, they often protect property rights of the ruling elite, but that's no different than in ancient, feudal, absolutist or mercantilist states. On the other hand, capitalism needs "blind" private property rights. Every citizen should have exactly same negative rights to buy and sell private property. This was the trigger of Industrial Revolution. And it is still certainly not the case on Mars, Somalia or Haiti.

Are the thrid world countries socialist then? Well, they are certainly much closer to socialism than libertarianism. After all, socialist government's only purpose in life is to infringe on private property rights. It's no different really from armed gangs in third world countries. More eloquent, yes. Substantively different, not. No wonder then that their GDPs per capita are similar.

niedziela, 6 marca 2011

Pedophilia, Zoophilia and Child Murder

This post was inspired by libertarianism definition in Encyclopedia Dramatica (ED). Obviously, in ED you should expect blatant, biased lies, and expect boring truths to get deleted quickly, according to their About, but that's precisely why it accurately reflects the most popular misconceptions about libertarianism.

Every libertarian will, sooner or later, be called child/dog fucker/murderer. Interestingly though, according to ED itself, the crimes are always perpetrated by non-libertarians. After all, ED claims libertarians are either 13 year old boys, fratboys who watch South Park, people that want to appear "alternative", or paranoid survivalists living in tiny cabins in Montana where they stockpile weapons and food for the dreaded day when Big Brother comes 'round tryin' to implant fail chips in their brains. I mean, pedophile 13 year old boys? Okay, I can see a paranoid survivalist occasionally fucking some stray dog high up in Montana, but that's basically it. So ED has to resort to fantasizing as in Glenn Beck case (assuming he is a libertarian) instead.

This got me thinking though. As a utilitarian minarchist, I could dismiss the whole issue immediatelly. I don't give a fuck about libertarian principles. If there is to be a legal child market for pedophiles, then fuck it (or more accurately, not fuck it), I prefer collectivism. But then the principles are not that bad anyway. Parents do not own their children. I can't see where that sort of primitive libertarianism even comes from. Also, children do not fully own themselves. That's all according to libertarian principles themselves and this is one of the grey areas where collectivism should kick in and find the most efficient utilitarian approach. Okay, so some children will die from hunger because they can't make a living in any other way than prostitution. But then we'll save so many children from sex abuse. Careful weighing of pros and cons. Problem solved, at least for children and retards (who are basically adult children).

Now, what about dog fucking? Does utilitarianism apply here? But what is utilitarianism really? Doesn't it rely on a hidden assumption of a right to happiness? Utilitarians often claim they do not believe in natural rights. But they do. They believe people have a natural right to happiness. Obviously, liberals/conservatives believe there exist positive rights, while libertarians only acknowledge negative ones. At least as far as humans are concerned. Neither liberals nor conservatives would like a dog to have a positive natural right to happiness though. After all, liberals/conservatives might suddenly find themselves in an awkward situation where a dog has a right to fuck them. This is actually a good illustration why positive rights are BS. Dogs do have a negative right to happiness, so fucking their asses should be illegal on that in fact utilitarian ground, but dogs do not have positive rights, so our own asses are safe too. Unless, I guess some genius can prove dogs love to be raped by other species. Since this seems to be one of our own gratest boogeymen (as any alien abductee can attest), we can easily assume dogs feel the same.

Finally, this brings us to the most common variant of child murder, abortion. Naturally, on utilitarian grounds, it causes more harm than benefit trying to prevent women from killing their unborn children, so we shouldn't. But then libertarian principles are not so pro-life either. If a child's existence was caused by deliberate action, parents would be responsible, and a mother would have an obligation to carry her child to full term. However, sex is a process where organisms form offspring that combine genetic traits from both parents. In other words, our species would have never evolved if sex was something we could choose to perform. We have to perform it, same as breathing, and rational reasoning has little impact on a man when he sees a sexy young coed, or on a woman when she sees a male that can support her offspring. Hence, children are conceived in a heat of passion, parents should not be legally responsible, and mother should not be forced to carry the child to full term. But doesn't that also legitimize child prostitution? After all, pedophiles also act in a heat of passion. No. Note I have nowhere said that a father has a right to fuck its unborn child, only that a mother does not have an obligation to carry her child to full term. Yes, technically the end result is the same as child murder, but the means are different. That's why we also make rape illegal, even though its end result (children) is same as in voluntary sex. Uffff...

As we can see, pedophilia, zoophilia and child murder would all be illegal in a utilitarian minarchist libertarian state, except for abortions, which are not really child murder proper, but rather a legitimate right to not having to carry the child to full term. But exactly same end result we get with libertarian principled approach, at least wherever property rights can actually be defined. In other words, libertarian principles do not support pedophilia, zoophilia and child murder, they are agnostic here and should be extended with utilitarianism so we can also account for children, retards and dogs.

piątek, 18 lutego 2011

Primitive Libertarianism

How a Libertarian Capitalist Became a Libertarian Socialist is a great story on libertarian propaganda failure.

Chris Wilson claims this is a personal story on his "transition from right-wing to left-wing libertarianism". Surprisingly, this is very accurate statement, but likely not as Chris meant it. If someone talks about "right-wing" and "left-wing" libertarianism, then I argue he has never actually parted with the most common fallacies in the first place. I'm not saying there are no "right-wing" and "left-wing" libertarianisms, there obviously are if people say there are, except I call both primitive libertarianisms, no less primitive than "right-wing" and "left-wing" dichotomy in general.

Typically people become libertarian when they get infatuated with Ayn Rand (at least in US), even if just for a short period like in Wilson's case. Now, there is nothing inherently wrong with Ayn Rand fiction. Quite contrary, Rand's a genius, at least as far as Atlas Shrugged or Fountainhead are concerned. They are both very true precisely because they contain relatively little philosophizing, they are simply dramatized morality and psychology stories. They are not just fiction though. I'm sure there have existed many actual persons that closely reflect Rand characters both psychologically and ideologically. It's true it's a relatively fictional world when we consider it from our 2010s perspective, but it is more accurate of say (no wonder), 1930s-1950s when they got published (or derived their inspiration from). Collectivism was then if full swing. Even most businessmen honestly believed all collectivist propaganda. But even then real people must have been significantly muted versions of Rand heroes and antiheroes. Still, Rand nowhere presents their heroes and antiheroes as common stock, there's always the background of indiscriminate masses. And it's a perfectly valid literary technique to focus only on psychological features that matter for whatever reason author deems them to matter, provided they are real psychological features.

However, Atlas Shrugged or Fountainhead are only then (mis)interpreted by many libertarians, including Ayn Rand herself in her Objectivist works. But they are all in fact no different than (mis)interpretations of the real world around us. Objectivism does not quite follow from Atlas Shrugged or Fountainhead, and Atlas Shrugged or Fountainhead are therefore not automatically rebutted (as if you could rebut reality) just because you've rebutted Objectivism. The most important (mis)interpretations of primitive libertarians are as follows:

1) Entrepreneurs have to be honest for the free market to work, that is never deceive customers nor seek government privileges.
2) Objective truth can be determined also on what consumer value scales (human action ends themselves) should be, rather than just on what constitute honest measures to achieve them.
3) Principles should overrule utilitarian arguments when it comes to specific policy recommendations (as opposed to principles in methodology of deducing them).

As for 1), it is evident we would have never achieved modern levels of prosperity if it were true. Entrepreneurs are human, so they habitually deceive customers and virtually always seek government privileges. As it turns out, even being ardent libertarian may not help, see eg this article about Kochtopus. Established entrepreneurs are actually the biggest threat to free markets, bigger even than socialists. Socialists create clear-cut anti-examples, while entrepreneurs, via government privileges, become parasites on what relatively can still be called a free market, but in fact is a collectivist system (corporate socialism) ridden with government aggression.

As for 2), here Rotbard rocks as usual in Mozard Was a Red. I don't think that sort of Randian is actually that popular nowadays though. At least it does not happen to apply to Chris Wilson's case. However, I'm not from US so maybe I underestimate Randian extremism popularity. See eg this American Beauty review. Dude, relax, even trash can be beautiful too, no need to make a libertarian case out of everything out there.

As for 3), I just don't buy this, even as an ardent Rothbard fan. Maybe I'm too stupid for Rothbard, but I still can't help being a utilitarian. I'm perfectly aware that easily 99% of utilitarian arguments out there are false and have been repeatedly used to agitate collectivism. Still, libertarians should "simply" rebut them all and present their own correct utilitarian arguments, rather than throw out the baby with the bath water. If it's a lot more work, so be it. As Albert Einstein, an ardent socialist, has said, make everything as simple as possible, but not simpler. Which also happens to show why we should never accept any argument based on authority only (or reject on lack thereof).

Now we can proceed with Chris Wilson's article to see that he remains as ignorant as he was before the "transition":

"I concluded that one who hoards land is placing a restriction upon the liberty of others to use it or to travel by way of it without justification, and hence the claimant should compensate them by paying a land value tax to earn exclusive rights to it."

I agree with Chris in that there should be real estate tax (see my position). It's easy to tax something though. Chris fails to mention where this money is supposed to go. I'd spend it on the army. But this is secondary, let's assume Chris would simply subsidize some legitimate government investment or process, so we could further lower eg head tax. Cool. I don't like his justification though. I can't really see why it is less legitimate to restrict the liberty of others to travel as oppposed to the liberty of others to use whatever I've produced out of land's fruits previously. I prefer taxes as fees for unavoidable government services, no more, no less, I can't see why there should be any distributive justice. Still, from this argument it is already obvious what Chris will state explicitely later, that "principles always came *first* for me -- not economics." And that's where point 3) applies.

"I did become much more critical of corporations, and I became upset with other libertarians for their lack of focus upon the injustices perpetrated by corporations."

That's a valid critique against some other primitive libertarians, which Kochtopus shows. But then Chris could never become more critical of corporations if he did not share the fallacy from point 1) in the first place.

"I've seen all these companies become just as ruthless as any multinational."

If Chris did not share fallacy from point 1), he would understand it is fallacious to require them not to be ruthless. They should be as ruthless as they can. That should be their highest priority, because it lowers consumer prices, hence raising the standard of living for all. But then:

"the more prosperous of these companies are now seeking to benefit from state privilege"
then later
"If they don't actually receive favors from the state, then it is typically their *aim* to receive them."

Of course, it's only natural. That's why libertarians try to make society aware that only minimal government (rather than "benevolent") is technically unable to grant privileges.

"becoming a hardcore Linux user in the process"

I wonder what exactly Microsoft's state privileges were? Or maybe just because Microsoft became "ruthless" in eliminating competion on the free market? That's precisely what Microsoft should have been doing, maximize its profits, for the sake of the consumers. Historically, it is obvious Microsoft was the victim of government aggression, rather than a beneficiary. Microsoft was even sued just because it wanted to bundle more of Windows components for free. Yes, free products are collectivist boogeyman, because we are informed that once they achieve large market share, their prices will sky rocket leaving society in ruins, even though there has never been a documented case of such fairy tale actually happening before. Note the collectivist threats (in fact again established competition lobby) always concern some indefinite future. As a result, even most businessmen still believe we should have anti-trust bodies, quite like in Rand stories.

"it gave me an appreciation for the extent to which corporations screw their customers"

Right, but then every company can screw their customers. Hence, all other things being equal, companies with best products win. It's analogous to the alledged problem of false advertising propaganda. Every company can lie via false advertising, so all other things being equal, companies with best products win.

"it finally truly sank in that businesses couldn't *care less* about principles"

And it shouldn't, business should care only about profits, otherwise it jeopardizes economic efficiency, rendering whole society poorer.

"those who run the company still think of the employees as a cost to be minimized"

And they should, owners should care only about profits, otherwise they jeopardize economic efficiency, rendering whole society poorer.

"I've taken on many more responsibilities than just tech support, but my wages haven't risen."

Maybe (just maybe) you have been paid too much in the first place. Have you ever asked yourself why not the other way around? Have you ever stopped to worry that it is you who exploited your employer? After all, it's perfectly symmetrical. Maybe your employer thought you were worth more, then found out he could had hired similar employee cheaper. Or maybe you were originally paid right, but then with time your value to your employer kept dropping.  Or maybe you were indeed paid too little, it's also possible. Maybe, maybe, maybe. Oh, well, then you should have simply left the company and get your fair price, whatever you believe it should amount to, elsewhere. Reality check!

"The advocates of capitalism believe that one can sign away or sell off one's liberty, whereas anarchists do not."

As a utilitarian, I don't care about people rights. But I believe selling off one's liberty is economically efficient. Slavery, protest collectivists hand in hand with anarcho-capitalists! Right, as if that was the actual problem with 19th century slavery, as if blacks were selling themselves voluntarily on the market, rather than having been first captured by government-licensed slave traders, with their enslavement for life regulated by government legislation. What an ignorance. With such thinking, even Soup Nazi suddenly becomes slavery.

"I didn't realize in my early "anarcho-capitalist" days that capitalists almost always demand more than what the worker initially agrees to give."

Wow, that's pretty fundamental. All summer jobs at your uncle, huh? But you still fail to undestand it's symmetrical. Analogously, workers always demand more (salary) than what the capitalist initially agrees to give. So who is try to exploit who? Both each other. It's only natural. But the free market does not cease to function just because people negotiate, quite contrary, the bargaining is precisely the engine of the free market.

"Jones is entitled to much better"

In that case Jones should get the fuck out and get the so "much better" elsewhere, simple.

"anarcho-communism doesn't provide an avenue for capitalism to reestablish itself and it has had partial revolutionary success in the past histories of countries such as Spain and the Ukraine"

Sure it has. Communists specialize in revolutions. They are always successfull. Communism/socialism inherent problems are not in revolutions though, but in economic calculation problems after revolutions.

"On one hand, there are the anarcho-primitivist luddites who eschew all forms of complex technology and wish to return to a hunter-gather society, and on the other, there are the anarchists who feel that technology can be beneficial if its development is directed by workers themselves in a manner that is accountable to the communities it affects."

I can't really see a difference between the two. If you accept technology only after it has been somehow deemed "beneficial" to someone by someone (how exactly?), established businesses (via guilds, regulation bodies, etc) in practice start to dictate which new technologies can be implemented and how. Obviously, none, because each new technology causes many companies go bankrupt and many people lose their jobs. It's a lot of pain. That's why the Middle Ages people thought they could well do without the pain. And they did, for a 1000 years. That's also why communism is just an atheist form of feudalism, and that's why Industrial Revolution was not started by religious communists like Anabaptists or first American pioneers, but by a classical liberal realisation of the benefits of free trade competition, even as primitively formulated as it was at the time.

"Working within the computer industry, I also understand that when technological complexity transcends our ability to understand it, this is an instance of the machine being in control of us and not vice-versa."

Rather, you have simply watched too much sci-fi. Also, I would never hire you as a programmer. Sorry, boss, this system's technological complexity tanscends my ability to understand it, it has just started to control me rather than vice versa. Wow, impressive. You should take some time off, looks like you're losing it. Also, get a book on object oriented programming.

"Whether technology is a form of liberation or domination is a topic hotly debated by anarchists"

No doubt they have many ratarded discussions. Technology is merely a tool. A conscious person uses tools as means to achieve ends. Now, some tools may indeed be better suited to achieve liberation vs domination ends, but it is ultimately up to the conscious person what ends she chooses for herself. Arguably we have had a perfectly libertarian state in 10th century Iceland and a perfectly communist state in 20th century Cambodia.

"but they agree, contra the right-wing "libertarians", that a society in which human-created circumstances force people to "agree" to subject their will to that of a boss is by no means "free". "

Before you start another revolution, can't you just call 911 when someone forces you to subject your will?

czwartek, 17 lutego 2011

Summary of Mike Huben's Critiques of Austrian Economics

Looks like I've basically finished all the links of interest (to a Misesian like me) from Mike Huben's index:


I've done Bryan Caplan, Paul Krugman, John Quiggin, Steve Kangas and Mike Huben himself in my earlier posts. All the other links are not worthy separate ones, so let's do them here.

Going from top to bottom, the first link I've not yet discussed is Scrooge Defended, "Michael Levin's Austrian Economics perspective on Dickens, so Panglossian and full of stacked assumptions that it is howlingly funny". Mike must have been really desparate, providing "funny" article from http://www.mises.org/ as a "critique of Austrian Economics".

Then follow 5 Hayek critiques, including one written by anarcho-capitalist Hans-Hermann Hoppe (poor Mike, just when I thought he could not get any more desparate). As a Misesian, for all I care, the more correct they are, the better.

Next there is An Austrian (Mis)Reads Adam Smith: A Critique of Rothbard as Intellectual Historian, which is interesting, though irrelevant. Basically, Peter Hans Matthews argues that Smith was not quite as bad as Rothbard painted him. In fact, Peter argues, one can even interpret Smith was aware of entrepreneurs after all... Okay, maybe he was, maybe he wasn't. So how does that exactly constitute a "critique of Austrian Economics"?

I let myself skip a link to "an outstanding page of criticisms, including luminaries such as David Friedman, Gordon Tullock, and Robert Nozick", same as later "index of books and articles criticizing Austrian Economics", I trust Mike, if he does not grant them direct links, they shouldn't be too relevant (especially when many links he does provide are irrelevant). But I no longer think Mike is desparate, rather, perfectly indiscriminate. He hates "libertarianism" so much that he can call the most ardent free-traders (and even anarcho-capitalists like David Friedman) "luminaries", provided they at least once criticise some other free-traders or libertarians on anything.

For Mises' Sake is an article by Tom G. Palmer who "savages Llewellyn Rockwell, the Ludwig von Mises Institute and Hans-Hermann Hoppe for Austrianism above and beyond the call of sanity." I have tried to read this, but see for yourself, this seems to be very personal, chaotic rant about Habsburgs, King of Spain, Hitler, Jews, Turkish invasion of Central Europe, Emperor Franz Joseph's and Kim Il Sung... I suspect Tom G. Palmer is psychically unstable.

The Social Welfare State, beyond Ideology is where Jeffry Sachs shows us "how social welfare states do as well as or better than low-tax, high-income countries". So what, correlation is not causation. Sure, rich states can afford to waste taxpayers money on welfare programs, that's all there is to it. And Jeffry Sachs forgets socialist countries have always had the most advanced welfare programs out there (with guaranteed jobs, even).

Now there is Some Capital-Theoretic Fallacies of Austrian Economics, where "Robert Vienneau attacks assumptions of Austrian Business Cycle Theory. Highly technical." Highly technical ideed. Let me quote:

3.0 Critique of Austrian Theory with a Detailed Example
Consider an entrepreneur who perceives the economy, or at least the markets he is
most concerned with, to be tending towards an Evenly Rotating Economy 

The fuck??? Robert Vienneau, time for sanity check, real world to ivory tower, please hit your head against the wall then come back.

Then two more critiques of Hayek, very good.

Finally, Mike blesses us with An Austrian Perspective on the History of Economic Thought critique, where Tony Endres calls it "highly jaundiced and purblind." Go ahead, read the "critique", it's fun. What Tony actually does, he simply repeats about 50 times (count for yourself) that Rothbard's work is ("unashamedly", I like this one best)... an Austrian Perspective, rather than a Liberal Perspective. Tony evidently assumes Austrian views are something you should be "ashamed" for.

That's it. Mike has spent 16 years to collect Critiques of Austrian Economics. 16 years. I have to congratulate Mike on all his work again (apart from my previous thank-you). There is no better place where one can evidently see how ineffectual all the "critiques" of Austrian School are. It's like when I always pray (even though I'm an atheist) for new socialist countries, because they are the best examples there can ever be of collectivist thinking dismal failure. Same for Mike's Critiques of Austrian Economics. Let us all pray there are more people like Mike.

Mike Huben goes philosophical

One of the links in Mike Huben's index of critiques of Austrian Economics points to his own post:


Austrian Economics is allegedly unscientific because it "has a methodological disrespect of data". Strange statement for a math teacher. After all, mathematics also has a methodological disrespect of data. Is math also unscientific then? Mike does not say.

Then follows the parable of the ship. The owner of the ship fails to identify the most important causes of his ship sinking, so the ship sinks. Analogously, according to Mike, Austrians fail to identify the most important causes of problems like "inflation or disease or whatever", because they have a methodological disrespect of data.

Mike does not seem to understand what "methodological disrespect of data" is. Mathematics theory also has a methodological disrespect of data, but does it mean mathematics cannot be used to interpret data? Of course it can, it is the most accurate tool to interpret data concerning unconscious matter out there. Analogously, Austrian Economics theory has methodological disrespect of data, but still is the most accurate tool to interpret conscious action data out there. Mathematics is so useful to interpret data precisely because it has methodological disrespect of data. Otherwise it would be specific data dependent, hence useless in most applications. But mathematics is data independent. Same for Austrian Economics. It is independent of real world data, so it can be safely used for accurate interpretation of any real world data that concerns conscious action.

It is therefore true that "Austrianism is staunchly against measurement", because measurement is "philosophically invalid", for the purpose of validating theory. However, to say Austrian Economists do "not use measurement" just because they don't need data to validate their economics theory, is same as to say that mathematicians do "not use measurement" because they don't need data to validate their math theory. What an ignorance. Austrians do analyze and interpret real world data, just read virtually any article at http://www.mises.org/

Mike goes on to say that "since Austrians are innumerate, instead they must rely on their assumptions". No, Austrians rely on their self-evident assumptions and logical conclusions precisely to be able to accurately interpret numerical data out there.

Then we read that "no assumption about the real world is totally true". Mike demands "total" truth, whatever that means. Sure, maybe we all live in a Matrix with our whole lives programmed, who knows. Still, I personally think it is useful to make a working assumption we don't. I don't really need "total" philosophical truth. There is only one such truth, ie that we exist, in some form. But there is nothing really useful you can deduce from it. So in addition to that "total" one truth, I also believe, for example, that people prefer leisure to work. In other words, this truth is "total" enough for me.

Mike agitates further that "you MUST introduce measurement and mathematics into your models if you want to have any hope of valid answers." No, you must precisely NOT introduce measurement into your models if you want your models to be measurement independent.

Finally, surprisingly, Mike says a very true statement that "logical verbal models are sufficient to specify possible chains (or networks) of causation, but telling which are significant is a quantitative problem that requires measurement." Perfect! Looks like Mike again does not seem to understand what he fights against...

Mike ends his article with a quote from... David Hume, while, as TheLowlyPhilosopher in one of the comments noted, "the main contribution to modern philosophy that Hume is known for is his argument against the certainty of induction and thus science. Hume famously is known for his argument that just because the Sun has risen for billions of years we cannot be certain that it will rise tomorrow. We cannot derive certainty from scientific observations (induction). Thus Hume rejected the idea that science and induction could give us absolute knowledge only probable knowledge." Precisely!

środa, 16 lutego 2011

Paul Krugman on ABCT

Yeah, Paul Krugman, a Nobel laureate, finally, let's see what the fillet of the contemporary mainstream economists has to offer against Austrian Business Cycle Theory or, as he likes to call it, "the hangover theory". After all, wouldn't it be convenient to get wasted with no hangover?

ABCT "as worthy of serious study as the phlogiston theory of fire". Great. One thing we have to grant Krugman, he does not set false great expectations, like Lord Keynes or Quiggin, just good old insults.

Krugman does seem worthy of his fame though, as we read that Hayek and Schumpeter were responsible for... "the spread of the Great Depression". Wow, that's indeed new. Turns out there was no "expanding credit and the money supply" back then in 1930s. Unfortunatelly, Krugman fails to provide any source of his revelations. Well, for a Nobel laureate, he probably must have some special insights. 1930s as gold money standard libertarian paradise with no money supply inflation. It's just so shocking ignorance, after all that so many economists have written on this subject. More at the end of this post.

Again, same as with previous social democrat articles we've discussed, there follows some basically accurate description of ABCT. Krugman even admits ABCT "is not a bad story about investment cycles", "except for that last bit about the virtues of recessions".

Krugman then says "a theory is supposed to explain observed correlations, not just assume them." Well, if Krugman actually read some Austrian School theory, he'd know that recessions are conclusions of Austrian School logical reasoning, not assumptions. Assumptions of Austrian School are way more self-evident, like that Krugman prefers leisure to work, so that's the reason he has never cared to read any Austrian School theory. Oh, well, just another Austrian School conclusion.

Krugman wonders, "if people decide to spend less on investment goods, doesn't that mean that they must be deciding to spend more on consumption goods". So again the generic statement exactly like of Caplan or Quiggin we've discussed previously. What people, what investment goods, what consumption goods? ABCT is not only "implying" but is explicitely saying "that an investment slump should always be accompanied by a corresponding consumption boom", that is, boom in consumption goods that reflect real consumer value scales. Wal-Mart suffers relative to Whole Foods during boom, then vice versa during depression. But obviously you can't expect an immediate and identical increase in consumption as the decline in production. This takes time. Investors are not going to spend all their money on consumption just because their long term projects have become unprofitable. Adjustment takes months (with no government aggression that is). Price mechanisms has to do their work. No entrepreneur has clairvoyance to immediately see their new business opportunities. Hence, higher temporary unemployment must kick in, salary expectations must change, to relay real consumer value scales across the recovering economy.

Krugman does seem to be aware of that when he says that "the best that von Hayek or Schumpeter could come up with was the vague suggestion that unemployment was a frictional problem created as the economy transferred workers from a bloated investment goods sector back to the production of consumer goods." I don't see anything "vague" in that "suggestion". But Krugman still has trouble to accept this as he asks "but in that case, why doesn't the investment boom—which presumably requires a transfer of workers in the opposite direction—also generate mass unemployment?". Simple, because there is no upward wage stickness. There's a lot of employee turnover during boom, but employees happily choose higher salaries in overiflated investment good sector over their current jobs, and there is no problem of employers shy of layoffs, so there is not even frictional unemployment.

Then follows the familiar keynesian explanation of depression. People somehow start to like cash more. "A recession happens when, for whatever reason, a large part of the private sector tries to increase its cash reserves at the same time." Why doesn't Krugman simply advise central bank to start printing ugly bank notes then? Surprisingly instead, Krugman's advice is to "junk the bad investments and write off the bad loans". Wow, isn't that what Austrians have been advising in the first place?

Nothing of much importance in next paragraph, just the usual rambling about conservatives who don't like printing money. I guess Libertarian Party would have to dissolve if our conservatives were actually so... libertarian. Some cutting edge psychological analysis too, as "some people probably are attracted to Austrianism because they imagine that it devalues the intellectual pretensions of economics professors". Krugman does seem to imagine himself above any layman (or even fellow economists') verification of his intellectual legitimacy.

And we even get Japanese example! "The truth is that the Japanese have been remarkably willing to make hard choices, such as raising taxes sharply in 1997." Yeah, let's raise government tax income so we can match inflated government expenditures. Hard choice indeed...

Finally at the end of his article, Krugman explains that "the Great Depression happened largely because policy-makers imagined that austerity was the way to fight a recession". Obviously, a quote from Rothbard should do, and only about how the massive inflation began, but Krugman, just educate yourself, anywhere, really:


Dr. Anderson records that, at the end of December, 1929, the
leading Federal Reserve officials wanted to pursue a laissez-faire
policy: “the disposition was to let the money market ‘sweat it out’
and reach monetary ease by the wholesome process of liquidation.”
The Federal Reserve was prepared to let the money market find its
own level, without providing artificial stimuli that could only prolong
the crisis. But early in 1930, the government instituted a massive

easy money program. Rediscount rates of the New York Fed
fell from 4 1/2 percent in February to 2 percent by the end of
the year. Buying rates on acceptances, and the call loan rate, fell
similarly. At the end of August, Governor Roy Young of the Federal
Reserve Board resigned, and was replaced by a more thoroughgoing
inflationist, Eugene Meyer, Jr., who had been so active
in government lending to farmers. During the entire year, 1930,
total member bank reserves increased by $116 million. Controlled
reserves rose by $209 million; $218 million consisted of an
increase in government securities held. Gold stock increased by
$309 million, and there was a net increase in member bank
reserves of $116 million. Despite this increase in reserves, the total
money supply (including all money-substitutes) remained almost
constant during the year, falling very slightly from $73.52 billion
at the end of 1929 to $73.27 billion at the end of 1930. There
would have been a substantial rise were it not for the shaky banks
which were forced to contract their operations in view of the general
depression. Security issues increased, and for a while stock
prices rose again, but the latter soon fell back sharply, and production
and employment kept falling steadily.
A leader in the easy money policy of late 1929 and 1930 was
once more the New York Federal Reserve, headed by Governor
George Harrison. The Federal Reserve, in fact, began the inflationist
policy on its own. Inflation would have been greater in 1930
had not the stock market boom collapsed in the spring, and if not
for the wave of bank failures in late 1930. The inflationists were not
satisfied with events, and by late October, Business Week thundered
denunciation of the alleged “deflationists in the saddle,” supposedly
inspired by the largest commercial and investment banks.

Was Mises an Anarcho-Capitalist?

Lord Keynes points out an alledged contradiction in Mises views:


On the one hand, Mises says:
"Thus the doctrine and the practice of interventionism ultimately tend to abandon what originally distinguished them from outright socialism and to adopt entirely the principles of totalitarian all-round planning"
On the other hand:
"The decision about each restrictive measure is to be made on the ground of a meticulous weighing of the costs to be incurred and the prize to be obtained."

LK obviously treats the first quote as a proof that Mises is anarcho-capitalist, while the second quote as a proof that Mises "contradicts" himself. However, the first quote is clearly about "the doctrine and the practice of interventionism". Does LK actually believe Mises' minarchism is "the doctrine and the practice of interventionism"?

Finally, we read that "Mises has left the back door of his praxeological system open to all types of intervention". That is correct, if "meticulous weighing of the costs to be incurred and the prize to be obtained" ever determined socialism to be the way to go, then sure, Austrians would support socialism. So bring it on! That's what I've been doing for the past few years, looking for legitimate arguments for socialism or social democracy. Still can't find any.

Praxeology never assumes neither laissez-fare nor anarcho-capitalism as the most efficient approach. Praxeology is about logical reasoning from self-evident truths. There shouldn't even be a special name for it, it's just rational thinking. Unfortunatelly, mainstream economists only slowly have been accepting self-evident truths, like asymmetric information, humans as irrational beings, living in a world of change etc, so we are where we are. Laissez-fare just happens to be the conclusion of logical reasoning. Now, Mises got minarchism, while Rotbard got anarcho-capitalism. From my previous posts it is clear that economists have found no legitimate errors in neither Mises' nor Rothbard's reasoning and assumptions. But I'm also worried that Rortbard has gone too far. I am unable to disprove him though, same as LK can't. Rothbard may well be the genius that only future generations can appreciate.

So let's just institute minarchism (common denominator) for the time being and go from there. It will be easier to understand anarcho-capitalism when we are closer to it, our children will continue our work. After all, we have all grown up under 20th century's "doctrine and the practice of interventionism", so no wonder our gut feelings are against its absolute opposite, we are quite likely still too primitive to understand the advanced technology of anarcho-capitalism, especially when most contemporary economists can't even get minarchism.

wtorek, 15 lutego 2011

John Quiggin on ABCT

John Quiggin, an Australian economist and professor at the University of Queensland, offers his view on Austrian Business Cycle Theory:


Quiggin starts by saying he shares his view on ABCT with Bryan Caplan. I was sort of disappointed, because I had already done Caplan on ABCT before:


So predictably Quiggin starts with the tired accusation that Austrian School "hasn’t developed in any positive way since" 1920s. Similar to Caplan, Quiggin confuses mainstream catching up, in more roundabout ways (obligatory tons of calculus), with Austrian School as of 1920s with "positive development". Better call it retarded development.

Hence, Quiggin sees Austrian School as an example of "ossified dogma" that "cease to respond in a progressive way to empirical violations of its predictions or to theoretical objections". Like with the recent Lord Keynes praxeology critique, I got immediatelly excited, sounded very promising. Unfortunatelly, I got duped again, looks like my naive optimism is incurable. As it turns out later in the article, John actually means... Panic of 1837... Hmmm, so what exactly were the alleged Austrian School economists before 1837 whose predictions were then violated empirically and who failed to respond in a progressive way? Beats me...

Some basically correct history and data follows (lengthy, as with Lord Keynes), like when Quiggin correctly states that the business cycle Austrian School "tried to explain predated both central banking in the modern sense of the term and the 20th century growth of the state." Very good. Austrian School simply explains business cycle that results from new money not backed by specie. It does not matter how you organize it, in the "modern" sense or not. "Modern" theft does not become less theft just because it is modern. In theory, business cycle could also happen in a completely free banking system, like between 1837 and 1862. In practice, it has always happened with some sort of government aggression. "Modern" approach is to use government money monopoly and fractional reserve banking. But a government endorsement of private banks is more than enough too, and that was the most popular approach throughout 19th century (even though the Panic of 1837 was surprisingly "modern" as we'll see later).

About 3/5 through the article we finally get to the first critique. Quite oblique one though. If I had not done Caplan before, I might have even not recognized it as such. It follows a couple of praises like that the "Mises-Hayek business cycle theory was actually a pretty big theoretical advance" and that "the Austrians were the first to offer a good reason for the non-neutrality of money", so no warning signs. But when I read about "(sub)optimality of market outcomes", then I start to fret. Either entrepreneurs or consumers or free market itself is then somehow always stupid, with the economist always playing the condescending wise guy pointing out allegedly "irrational" things. Irrational that is, according to the economists' simplistic models. And here it is: "If investors correctly anticipate that a decline in interest rates will be temporary, they won’t evaluate long-term investments on the basis of current rates." In other words, entrepreneurs must be stupid if they cannot predict if low interest rates are only temporary or not, so they are clearly also not rational, and "there’s no reason to think that market outcomes will be optimal in general". Same as Caplan, Quiggin obviously confuses devine clairvoyance with business rationality. You can easily get rich 10 times over and over again by correctly recognizing customer needs (hence maximize optimality of market outcomes) before you are able to "correctly anticipate that a decline in interest rates will be temporary". Only ivory tower economists can make such absurd statements about the real world business people.

Interestingly though, with Caplan we already have two serious mainstream economists stating businessmen should somehow predict future interest rates to estimate long-term profitability of investments. This sounds great in a free market system. After all, as Rothbard has said, businessmen are all "trained to estimate changes and avoid error". However, with current government aggression of fractional reserve banking directed by economists, what economists are in fact saying is, businessmen should be able to predict what economists themselves will do in the future! And who is best to help businessmen out in that prediction, for a reasonable fee via financial consulting service, just in case they lack devine clairvoyance?

Further, virtually identical as one of Caplan points, Quiggin throws generic statement like "Austrian model implies that consumption should be negatively correlated with investment over the business cycle, whereas in fact the opposite is true". Consumption of what products? Consumption of products that actually reflect real consumer value scales is indeed negatively correlated with investment over the business cycle, according to Austrian model itself. Wal-Mart suffers relative to Whole Foods during boom, then vice versa during depression.

Then we read "finally, the Austrian theory didn’t say much about labour markets". So we have "finally" already? Again, felt duped, after so grand expectations. Quiggin states that "it was left to Keynes to produce a theory of how the non-neutrality of money could produce sustained unemployment." But what more can there be said about sustained unemployment by Austrians really? Just keep subsidizing private bankers and creditors by ultra low central bank interest rates and new money pumping after recession hits, just as Keynes likes it. Sustained unemployment guaranteed, says Austrian theory about labour markets today in 2011, exactly same what it said in 1920s. On the other hand, no doubt there's been a lot of ratarded "positive development" by Keynesians in the meantime.

There is some more after all. Hayek and Mises "took a nihilistic ‘liquidationist’ view in the Great Depression, a position that is not entailed by the theory, but reflects an a priori commitment to laissez-faire". Wow, "nihilistic" and "liquidationist" so scary! Run, Forest, run, don't ever think for yourself! Well, Hoover and Roosvelt were certainly not "liquidationist". They were the compassionate guys, and creative as hell ;) The results of their lack of "a priori commitment to laissez-faire" were still obviously dismal:

US Census Bureau statistics show that the official unemployment rate was still 17.2 percent in 1939 despite seven years of "economic salvation" at the hands of the Roosevelt administration (the normal, pre-Depression unemployment rate was about 3 percent). Per capita GDP was lower in 1939 than in 1929 ($847 vs. $857), as were personal consumption expenditures ($67.6 billion vs. $78.9 billion), according to Census Bureau data. Net private investment was minus $3.1 billion from 1930–1940.

As he nears towards the end, Quiggin cannot understand why "the choice of policy [that causes business cycle] varies from Austrian to Austrian." He enumerates four proper (the other two he mentions in same breath, free banking and competing currencies, are actually Austrian policies): paper money, want a gold standard, central banks and fractional reserve banking. Now, Quiggin, a small IQ quizz for an economist: what do they all have in common? Correct answer: they are all government tools to inflate fiat money.

Finally, Quiggin classifies the Panic of 1837 as part of the free banking period. That's as if we classified Black Tuesday of 1929 as part of Hoover/Roosvelt era. Hoover/Roosvelt did manage to prolong the Great Depression till 1939, but how can I blame them for 1929? I have to blame their predecessors that inflated money supply in the 1920s, as Rotbard superbly does in America's Great Depression (http://mises.org/rothbard/agd.pdf). Analogously, the free banking period did start in 1837, but not before a period of runaway inflation thanks to fractional reserve banking under the auspices of Second Bank of the United States in the 1830s:

"For every new Mexican silver dollar deposited in a bank by an American merchant or manufacturer, the bank created at least five new paper dollars or paper credits."

So what business cycle Quiggin means when he says that "US had free banking from the Jackson Administration to the Civil War and that didn’t stop the business cycle"? Beats me. Lots of bank bancruptcies in that period, sure, but no depression in that period that I know of. The Panic of 1837 is just an example of fractional reserve banking catastrophe in 1830s.

I can only wonder where Quiggin read that "Rothbard offers some historical revisionism to argue that the Panic of 1837 didn’t really happen". See eg


President Van Buren also set a staunch laissez-faire course, in the Panic of 1837.

I can't really see a ", that didn't really happen" after 1837...

But I feel truly helpless when Quiggin states that "free banking in late 19th century Australia didn’t prevent a huge boom and subsequent long depression around 1890". Quiggin really should have some mercy, unless he intends his blog to be read only by his fellow Aussie economists. So what now, are we supposed to believe him just because there is so little available online on that particular depression? Can't he defend his points using well known depressions?

My Position

It's time to state my views in detail. Basically I'm a minarchist, Misesian libertarian. As it turns out, I'm quite a collectivist too, at least compared to Rothbard, even though I do love all the original Rothbard's insights (like that free market monopolies are oxymoronic).

Most important thing is, Rothbard is the best economics teacher out there. There is no better presentation of economics theory than Man, Economy and State and there is no better classification of government aggression on top of free market than Power and the Market. There is no better economics history book than An Austrian Perspective on the History of Economic Thought, Volume 1 and Volume 2. Finally, there is no better practical exercise than America's Great Depression. This is all crystal lucid, logical writing with great insights. Rothbard rocks your socks off.

However, I still can't help but support government legislative monopoly (public legislative bodies, with private ones illegal) and government monopoly on violence (public courts, police, army, with private ones legal). Monopoly on violence understood as monopoly on legitimacy of violence, so private courts, police and armies should be legal, provided their legitimacy derives from the state.

I also like public roads, subways and national/city parks. They are so nice! No, seriously, I simply accept the utalitarian argument (yes, Rothbard turns in his grave right now) that they are more efficient than private ones. If I have to pay toll for every road or park I go through, then fuck it, I prefer collectivism. They should simply be included in public planning and zoning. Yes, public planning and zoning, you've heard it right. I want to live where people live, not where they work, so if you want to set up a company with real world employees or customers who clog my local traffic and block my driveway, get the fuck out and rent a proper office where other offices are. Too poor to rent an office? Then get the fuck out to inner city area with no zoning, simple. Obviously, again, private roads, subways and parks should be legal but the state should take the utmost care they are never actually needed, except, obviously, private development local roads.

Furthermore, according to my collectivist views, government should also mint money, and fiat money at that. I don't think there is anything wrong with fiat money, provided there is zero supply inflation. So anyone should be able to mint any money they wish, fiat or whatever based, if there is market demand for such, provided there is zero supply inflation. Fractional reserve banking is theft, but other than that, free banking.

However, taxes would have to be paid only in government money. Yeah, there will be some taxes, you've heard it right, but only one tax paid by everyone directly, head tax, part national, part local. Head tax (fixed nominal amount per individual) should cover legislative bodies, federal police (national), state and city police and parks (local). Those who own real estate will also pay real estate tax to cover the army, proportional to area owned (that's what the army essentially does, protects the contry's real estate). Real estate tax should not be proportional to its value, unless I guess someone proves it is more expensive to defend city center than a rural village. Courts should be covered by fines paid by the guilty, roads should be covered with gas sales tax.

That's basically it. You get the gist. Taxes as fees for unavoidable government services. No distributive justice taxes like income or profit taxes. Now, you don't really have to pay any taxes (you can even avoid gas tax if you import your own own gas from abroad). It's up to you. But if you don't pay taxes, you can't own real estate and neither public nor private police and courts can protect you. You are then on your own, simple. But note that if you try to build your private army and defend some area by yourself, you'll be treated as an aggressor, because you cannot legally own any area.

How to transform our countries to the above libertarian/collectivist paradise? That should take about a week. Monday, end all corporate welfare, subsidies (starting with the biggest parasites like farmers) and import taxes. Tuesday, stop inflating government money and end its monopoly. Wednesday, end all industry regulations. Thursday, make public education, health care and social security optional and privatise them all. Friday, privitise everything else except government itself, courts, police, army, roads and parks. Saturday, end all taxes except for the specifed above. Sunday, legalise all drugs and have some hallucynogenic fun that'll last you for the whole next week, you deserve it.

Critiques Of Libertarianism

I believe I owe explicit thanks to Mike Huben's Critiques Of Libertarianism site and blog before I go on further with my own:


Mike Huben's original site (sixteen years old) is the next best thing (after http://www.mises.org/) that could ever have happened to me, as far as my libertarian views are concerned. Don't get me wrong, no irony intended. I'm simply a libertarian that values criticism above anything else. Criticism is what makes most discussions interesting, unless there are some big new insights, which neither I nor Mike Huben pretend to have, we are no economists after all. All the ideas have already been elaborated by much brainier guys before.

Nice feature of Critiques Of Libertarianism site is, it's completely indiscriminate. No consistency whatsoever, critiques written not only by liberals and conservatives, but also by various factions of libertarians themselves. In other words, the critiques originate from virtually the whole political and economic spectrum. As such, obviously, they are often mutually exclusive and cannot all be true, but still, libertarians should not dismiss the site just on this ground. This is a great opportunity for our libertarian development, which no libertarian-biased site can ever provide. Here are all the "best" arguments against libertarianism in one place, even from libertarians themselves! Mike has spent sixteen years to make sure there are! I believe we cannot be true libertarians before we have a consistent set of rebuttals for every one of them. Unless, obviously, given critique is correct, our own views or arguments incorrect, and then we either can figure out how to fix them, or have to... become liberals or conservatives. Mike does make many good points. Libertarian simplistic propaganda of false arguments do exist. Still, so far, I have not found, on Mike's site or anywhere else, a single argument that would actually rebut libertarianism or Austrian School themselves. If I did, again, I would now be a liberal or conservative. However, there are many arguments that do rebut some less sophisticated libertarian ones. This is where the whole benefit of Mike's site lies. It helps you become more sophisticated libertarian. It helps you know better what you stand for. It motivates you to drill down deep down into economics theory. It's a lot of work. But at the end of the day, you'll see everything all the more clearly. You'll be greteful for all the critiques. Libertarian sites give you great theoretical tools and infinite supply of articles that nicely explain all liberal or conservative fallacies, the best one being http://www.mises.org/ But before you really understand any theory, you have to solve many untrivial practical exercises by yourself. And Mike happily provides one central place where you can easily find them all. Wonderful!

That's why I've decided to create this blog, mostly for myself, to organize all my own solutions in one place, but hopefully it will also inspire other libertarians to do the same, for a bright sophisticated libertarian future ;)

poniedziałek, 24 stycznia 2011

Apodictic Certainty of Praxeology

Lord Keynes (LK) praxeology critique
seems impressive, so many bibliography references, cool.

In the beginning, LK notes that Schumpeter and Hayek do not subscribe to Mises' praxeology. That is true, so what? Second, LK notes that some Austrians do not follow Mises' praxeology in its pure form or are critical. This is also true, so what? But my hopes for a sound praxeology critique were still sky high at this point.

Not so fast, LK states the obvious that praxeology cannot verified by empirical data. Then follow lengthy excerpts from Mises. OK, let's wait, getting impatient though. Suddenly, LK states that "there seems to be little point in the use of empirical data by Misesians". Completely unsupported claim. After all, Mises theory can still be used to interpret historical empirical data and to predict future empirical data. Obviously, Mises theory interpretations and predictions can only be qualitative rather than quantitative, but this limitation comes from the ordinality of value scales of real human beings. It's no use to complain about reality. My hopes start to dwindle. Now I suspect this is another typical leftist post that draws false conclusions from the obvious.

LK then states that "Austrian economics has been accused of intellectual stagnation for failing to take empirical research seriously". That actually reminds me both Brayan Caplan and Steve Kangas esseys discussed in my earlier posts this month (Why I am an Austrian Economist, Cranky Critiques of The Austrian School). Mainstream's economics catching up with Austrians over last few decades is often confused with intellectual development.

LK even gives examples! "For example, Leibniz’s monadology was an elaborate theory arrived at by aprioristic argument – but completely refuted by modern science." Yes, but Leibniz’s assumptions were not self-evident, so they were equivalent to religious dogma. And conclusions of any aprioristic argument based on dogma are also dogma, because you can logically derive both true and false from false. Basics...

Here again follow further lengthy excerpts from Mises that prove that "even Mises himself admitted that synthetic propositions as auxiliary hypotheses entered into his praxeological deductive reasoning. If such assumptions do not correspond to the “real conditions of the external world,” then his inferences are unsound and untrue." Very good, if auxiliary propositions are false. Basics...

Next LK lists "four main ways in which praxeology can be criticised". The first way, "questioning the truth of Mises’ axioms", is obvious. Unfortunatelly, LK states he does not "focus" on this one, that is, he ignores it completely. Hence, LK has nothing against Mises axioms. The second way, "showing flaws in the verbal chain of logic", is also obvious. Unfortunatelly, even though LK promises to "focus" on this one, there will be nothing about this later in his post.

It gets more interesting with the third way, "demonstrating unjustified subsidiary propositions or hidden assumptions in Mises’ reasoning that invalidate his conclusions". This is another obvious one. First LK cites Schuller accusing Mises of hidden assumptions. Nothing concrete. Then cites Blaug allegedly "giving specific examples of these hidden assumptions". But Blaug simply states his belief that negatively inclined demand curves allegedly need more assumptions than purposive choice. Even if true, what are those alleged hidden assumptions? Are they false? Nothing. Next LK states that W. Meyer has also shown "various unproven hypotheses about expectations and information in free market economies". Like what? For God's sake, LK, can't you just tell us??? Nothing. Finally, LK cites Mises that disutility of labor is a subsidiary assumption. So what? Is this assumption false? Nothing.

Then suddenly LK says "it is clear from all this that Mises’ praxeology does in fact have severe flaws in its verbal chain of logic and argumentation". What verbal chain of logic and argumentation flaws? Where? I only read some people stating there may potentially be some hidden assumptions, and Mises himself stating one subsidiary assumption explicitely. LK promised he would show Mises' assumptions that "invalidate his conclusions". Not only LK fails to do that, but there is nothing about verbal chain of logic. Except maybe for Appendix 3 explaining why premises must be true for the conclusions to be also true... Wow, groundbraking..

Finally, the fourth way praxeology can be criticized, according to LK, is "the question of how to choose between competing praxeological systems derived by a priori deduction from (allegedly) certain starting axioms". But it's simple. Check assumptions. Are they all self-evident? Check chain of logic. Is this correct?

In short, LK wastes 50% of his article on generic citations, 40% on repetitions of the obvious and 10% on false statemements out of the blue. In other words, even though LK says nothing about verbal chain of logic flaws in praxeology in particular, his article itself is chock full of such flaws.

Greedy Reductionism of Mainstream Economics

Casma Shalizi has written a delightful article, except maybe for the last point:

Points 1, 2, 3, 4 and 5 simply state the obvious, but it gets real interesting when in point 5 Casma can't see why errors in macro-level theory "should always be the preferred option in economics". Very good! Maybe there are micro-level errors after all! Accordingly, "maybe the simplification of always solving for the equilibrium is wrong". Perfect! Mainstream economics long-term equilibrium equations assumption of homo economicus is a perfect example of a micro-level error, which "accumulates when one goes to the level of whole economies". Wonderful! Finally, Casma finds an analogy that "classical physics predicts that matter should be unstable". Another excellent example of greedy reductionism based on primitive (classical) micro-level models!

Then in point 6 Casma continues to state the obvious, Austrians do usually develop their theory post-hoc. And that is correct, after all, also virtually all mathematical proofs have been developed post-hoc. But you better have correct micro-level theory first!

Finally, in point 7, Casma believes that macro-level causal model is easier to develop than micro-level one. Certainly! Greedy reductionism example! But why should something be "more suitable for policy-making" just because it is easier? Beats me...