poniedziałek, 24 stycznia 2011

Apodictic Certainty of Praxeology

Lord Keynes (LK) praxeology critique
http://socialdemocracy21stcentury.blogspot.com/2010/10/mises-praxeology-critique.html
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:
http://cscs.umich.edu/~crshalizi/weblog/711.html

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...

sobota, 15 stycznia 2011

Cranky Critiques of The Austrian School

Steve Kangas, a liberal political journalist, argues that The Austrian School is a crank science:
http://www.huppi.com/kangaroo/L-ausmain.htm
Let's apply a crankometer to the arguments themselves:

Summary:

The Austrian School is "based purely on logical assumptions", which, allegedly, "is the very method that thousands of religions use". Wow, where do we start here. First off, there are no "logical assumptions". Logical can only be conclusions. Assumptions are statements we accept to be true, but cannot actually prove to be true. Preferably, assumptions should be self-evident. Otherwise, they are dogma, which religions are based on. And even though religions use assumptions, they dabble in logical reasoning (mostly non sequiturs) to produce logical conclusions only when it suites them. But here Kangas seems to be saying that religions use logical arguments to reach conclusions based on self-evident assumptions. Now, I could picture a rational person saying that only if he was high or mad, so you better buckle up for the rest of the ride through all the crucial arguments of his essey:

Introduction:

"Mainstream economists dismiss the Austrians as cranks."

Austrian methodologies so cranky!
Everybody with a government job says so!

"Several of its founding figures struggled to make ends meet, rejected by universities which did not view their work as sound."

Public universities. No wonder. Would you consider a work that says you are evil as a sound one? Well, only if you actually accept you are evil, but that rarely happens. Rather, you would have never become evil in the first place.

Scientific Method:

"Humans are not born knowing that two plus two equals four. It is something they must learn from their environment, namely, school."

And in the first school back then, they simply made a vote, how much two plus two should be...

"The fact that we have thousands of different religions in the world is remarkable evidence of the fallibility of this [Austrian] method."

Logic unpopular? Logic fallible! Quite a logic!

Statistics:

"A good analogy is the study of gases."

Yeah, gases are good analogy to people, so we can use statistics in economics all right.

Methodological Subjectivism:

"Even granting the premise that humans are endowed with free will,"

Wow, thank you Kangas, for a collectivist, you're just too generous in your grants...

"there is no denying that even impersonal forces affect human actions to a very large degree."

We live in a mostly impersonal environment that affects our actions, like laws of physics, accidents, natural disasters or luck, which allegedly prevent us to make subjective decisions. If Kangas is so retarded that laws of physics prevent him from making subjective decisions, then let him speak for himself.

Methodological Individualism:

"Even in their primary role as organizers, entrepreneurs depend on the group."

Precisely that "dependence" (as Kangas understands it) is why entrepreneurs are the primary driving force of the market process. They are at the top of the structure, they run the whole economy, so obviously they "depend" on people, because they need people for hire. As you go from top to bottom, trough all the managament levels, the "depenency" on the group lessens. Finally at the lowest level, you have ordinary workers, whose work does not "depend" on the group at all, but on the workers themselves. Of course, this is somewhat twisted understanding of "dependency". Normally we would say the workers depend on entrepreneurs to provide jobs. So, yes, we are all interdependent, there are proactive entrepreneurs who build and then run the economy from scratch and there are workers who passively benefit from all the entreprenural hard proactive work. Workers only need to sign up for jobs earlier created by entrepreneurs, before they can finally start all the complaining about "exploitation".

"Individual firms are rarely the basic unit of the economy; almost all products run through several firms before completion."

Precisely that's what basic means, you usually need a couple of basic units to build something more complicated than basic. Elementary basics, Kagan!

"Picking out the entrepreneur as the primary level of analysis is like singling out the quarterback as the isolated actor of a football team."

No, picking out the entrepreneur as the primary level of analysis is like singling out the owner as the isolated actor of a football team. Kangas must have had a hard time in school, a nerd, but even jock-quarterbacks were brighter.

"Different branches of science actually seek to explain human behavior at many different levels: the gene, the individual, the group, and the specie. Being open to different types of methodologies is characteristic of mainstream science. Insisting on only one methodology at all times is a feature of crank science."

Kangas, jumping mindlessly from "levels"to "methodologies", does not seem to understand what scientific method actually is. Biologists analyze nature on a different level than physicists, but they use exactly same scientific method. A scientific method consists of the collection of data through observation and experimentation, and the formulation and testing of hypotheses. Note that mathematics does not use the scientific method. Now, since Kangas believes people are like gases, no wonder he believes economists should use exactly same methodology as physicists. Austrians, on the other hand, believe people interactions are somewhat more complicated, to the extent that you cannot test your hypotheses against observations. You cannot really experiment with people same as physicists experiment with inanimate matter, or even as biologists experiment with animals that lack consciousness. With conscious people there is no repeatability required to use scientific method same as in physics or biology. Kangas, think for a second, if observations could actually prove or disprove economic theory, would there really be "different types of methodologies" in economics? Why would then economics be split into so many opposing camps for that last couple of centuries, like, say, psychology? Still, Austrians believe you can use logic to deduce economic laws from certain self-evident truths, precisely like in mathematics, but unlike in psychology. The laws (the logical conclusions) are not testable against observations, but can still be used to predict future events or interpret the past. Like, for example, the collapse of every socialistic country. In other words, the fact that every socialist country collapses does not itself prove Austrian theory, but is just a logical deduction from self-evident truths.

"Methodological individualists claim that individuals seek to maximize their personal rewards. But if this were true, then soldiers would become conscientious objectors instead of risking death in war. Charity, favors, volunteer work, loans and other forms of altruism would never happen. Parents would not sacrifice for their children. True believers would not sacrifice their resources or their lives for a cause. Yet these things happen."

According to Steve Kangas, people fighting for their own country, for a cause, giving money to charities, favors, volunteering etc are not maximizing their own personal rewards. But they do it, and they do it repeatedly. In other words, Steve Kangas subjective feeling is, they are stupid. Kangas, speak for yourself! I, for one, find giving money to charity as personally rewarding.

Starting assumptions:

"Austrians commit the very same sin they accuse mainstream economists of doing, by calling for utopian starting conditions before their model will work as advertised."

Well, Austrians do not find lack of government aggression "utopian", so they ignore it in their starting conditions. After all, historically, that's precisely what starting conditions were. However, Austrians do analyze in detail the results of government agression on top of the free market, like eg Rotbard's Power and Market. On the other hand, mainstream economists never account for their, truly utopian, simplifications. People never had symmetric information, they were never fully rational beings, living in a world of no change etc. As Kangas admits, mainstream economists are slowly catching up with Austrians by "discovering" all that. Hopefully, mainstream will finally "discover" all the self-evident assumptions of Austrian theory by themselves, but can't they just read a book written 50 years ago instead?

The Market Process:

"Both companies and governments provide goods and services in exchange for money."

Right, except a small difference with governments is, just try not buying the services!

"Companies and politicians that do not perform well go bankrupt or are voted out of office."

Right, that's why everyone is as happy with their government as with their favorite soda brand...

Monopolies:

"John D. Rockefeller monopolized oil under his Standard Oil Company"

Between 1870 and 1885 the price of refined kerosene dropped from 26 cents to 8 cents per gallon. At the very pinnacle of Standard’s industry ‘control,’ the costs and the prices for refined oil reached their lowest levels in the history of the petroleum industry:
http://www.dadyer.com/Economic%20Readings/witchhunting%20for%20robber%20barons.htm

Monopolies simply do not exist on the free market. Anyone who wants to prove there has ever existed a monopoly on the free market, should at least have evidence of rising prices. But try to read all of the "monopoly" reports again, you will only find revelations about some vague possible rise in some undeterminate future, never an actual, historical rise.

The Gold Standard and Business Cycle:

"The theory that the Fed's monetary expansion and easing of credit restrictions results in "malinvestment" is an unsupported claim."

Right, because ninja loans make perfect mainstream economic sense ;)

The History of the Austrian School:

"Socialism means that workers own the means of production, not private individuals or an elite group."

Kangas does not consider workers as private individuals then? No wonder for a collectivist...

"As you can see, socialism is hardly synonymous with a central planning committee."

No, actually, I can't see, show me please a socialist government with no central planning commitee.

The politics of the Austrian School:

"One presumes the extraordinary losses evoked in the above quote refer to corporate profits."

Indeed, the profits are "merely" the sole objective measure of economic efficiency, let's ignore them...

czwartek, 13 stycznia 2011

Why I am an Austrian Economist

Why not? Brayan Caplan, Assistant Professor of Economics at George Mason University, tells us why:
http://econfaculty.gmu.edu/bcaplan/whyaust.htm
Why yes? Let's analyze his points:

2.1. Utility Functions vs. Value Scales

Caplan states "A utility function just uses numbers to summarize ordinal rankings; it doesn't commit us to belief in cardinal utility." Yes, false assumptions do not commit us to "nothing extra". But they do enable us to deduce false "extras". Make some "discoveries" which may or may not be true. As we'll see below, Caplan repeatedly admits that mainstream economists keep catching up with Austrians in this or that regard. They keep adjusting their artificial mathematical models so they are finally in agreement with Austrian theory. So why were they wrong in the first place if they were not commited to nothing extra?

Next Caplan accuses Rothbard that he has allegedly borrowed the substitution and income effects from the standard utility function analysis. Here's a rebuttal: http://mises.org/daily/4223

2.2. Indifference

Caplan states that "one can only observe that I choose a green sweater; but this does not rule out the possibility that I was actually indifferent between the green sweater and the blue sweater". Sure, but then Rothbard nowhwere says you cannot be indifferent, only "that indifference cannot be a basis for action". Caplan's indifference was not a basis for the choice of green sweater. He never made a choice to buy green sweater. He only made a choice to buy some sweater. Its color did not matter to Caplan so he never actually chose the color. As a good test, if he really is indifferent, then he should agree to close his eyes and pick one of the two sweaters at random. In fact, this applies to virtually any purchase out there. There are always some product features we don't care about. If we actually had to have a preference about all features of products we buy, we'd probably never buy anything. But we do buy stuff, and the basis for all the purchasing actions is always preference, even though we are usually indifferent to most product features. It does not matter, because the preference applies to features that we actually care about.

2.3. Continuity

Why all the intersecting supply and demand lines in Rothbard's works if he rejects the assumption of continuity? It is one thing to connect the dots for better visual illustration, and quite a different thing to use calculus on underlying ordinal reality.

2.4. Welfare Economics

In short, what Caplan is saying, if everyone were a die-hard communist, then people's utility gains (satisfaction) from communism would outweigh any voluntary exchange benefits. I admit that's true. Let's just all learn to love living like animals without division of labor! Light version: learn to love feeling envious of your neighbour's wealth to offset his bad feelings after you have stolen from him. Absurd? Not for Caplan.

2.5. Subjectivism

Strange as it sounds, Caplan's reason not to be an Austrian Economist is that neoclassicals now also believe in subjectivism. Look, here is a theory that has finally catched up with Austrian School in this or that regard, let's embrace it!

3.1. Economic Calculation and the "Impossibility" of Socialism

Collapse of a fully socialist society (due to lack of economic calculation) is, according to Caplan, a quantitative prediction. What? Collapse sounds perfectly qualitative to me. Still, Caplan is correct that "current events do nothing to show that economic calculation was the insuperable difficulty of socialist economies". In other words, Caplan does not accept the lack of economic calculation as a primary problem, because no socialist country has ever complained about it. After all, they all use accounting, don't they? Well, Chinese did kill all their accountants once, but in general, socialist countries do use accounting, and use it a lot, the red tape is phenomenal. So one might say, economic calculation in socialism is phenomenal! But is it legitimate to equate accounting with economic calculation? Depends on the environment the accounting is being peformed in. If it is free market environment, then it is economic calculation all right. If it is central planning environment, then it is just a desparate measure to know, more or less at least, what's going on. In practice, socialist countries just keep the accounting inherited from previous prerevolutionary capitalist owners, or, in current global economy, imitate the calculation of neighbor capitalist countries. However, slowly but surely, the socialist accounting degenerates as inefficient absurdities keep piling up and, sooner or later, follows unevitable collapse. But the lack of economic calculation will never "show up" explicitely. No socialist will ever perceive the problem, because, like neoclassicals, they can't see past their calculus equations inadequate for human action phenomena. The books will look good, the inefficient absurdities keep piling up precisely because they are invisible with the lack of actual economic calculation. But socialist countries will "mysteriously" keep getting poorer compared to capitalist countries. Socialists will obviously keep coming up with new ideas why it is so (foreign imperialists, speculators, greed etc), Caplan will read all that socialist propaganda and will state that "current events do nothing to show that economic calculation was the insuperable difficulty of socialist economies".

3.2. Monopoly Theory

Strange as it sounds, Caplan's reason not to be an Austrian Economist is that neoclassicals have agreed that perfect competition sucks. Look, here is a theory that has finally catched up with Austrian School in this or that regard, let's embrace it! But no, wait, neoclassicals have now even left Austrians in the dust:

A producer of a relatively unique product sets a profit maximizing price way higher than the product's marginal cost. This fact, according to neoclassical research, constitutes "unrealized gains to trade", which are "monopolistic distortion unless firms face a horizontal demand curve", because people willing to pay above marginal cost, but less than the profit maximizing price, won't buy the product.

Now, neoclassicals obviously fail to account for the gains of trading at the higher price. If the producer set the price lower than to maximize his profit, there would exist less incentive for competitive producers to try to come up with a similar product. Caplan does not realize that what he considers to be a "monopolistic distortion" is in fact precisely the mechanism that prevents the alleged monopoly to last longer than temporarily on a free market. Which then cannot be properly called a monopoly in the first place. What was to be demonstrated. Unfortunatelly, Caplan may never be able to comprehend this dynamic process, because it cannot be formulated as a neat mathematical equation.

3.3. Public Goods

Caplan's beef here with Rothbard is that Rothbad claims public goods and positive externalities do not really exist. Rather, "what he should have done was emphasize the public goods problems of government, along with voluntary solutions to genuine public goods problems on the free market." Also, "Rothbard deserves praise for analyzing the extent to which private property can solve externalities problems". Well, fine with me...

3.4.1. The Correct and Widely Accepted Aspects of the ABC

Strange as it sounds, Caplan's reason not to be an Austrian Economist is that neoclassicals, by 1997, have agreed with Mises-Rothbard view of unemployment. Look, here is a theory that has finally catched up with Austrian School in this or that regard, just maybe not as "boldly as Mises or Rothbard". Let's embrace it!

Caplan's further criticizm is that Mises-Rothbard view focuses on government and unions as the fundemental cause of unemployment, while Rothbard admits "that either business firms or the workers themselves may become persuaded that maintaining wage rates artificially high is their bounden duty". Precisely that's why Mises-Rothbard view focuses on government and unions. If business firms or the workers themselves, in effect, increase unemployment through their voluntary non-aggresive decisions, they have a right to do so. But government and unions claim they fight unemployment, and use aggression for this purpose (assuming unions posess aggression privilidges granted by government, like when employers are forbidden to fire strikers etc), so Mises-Rothbard's focus on government and unions is only natural. Why should we criticize someone only because he does not want to hire, or get hired, below artificially high wage rates? That's his private matter. But we should obviously criticize anyone who forces others into unemployment, even, or especially, while claiming otherwise, or sincerely wanting otherwise.

Finally, Caplan finds an alleged discrepancy in Rothbard views, because Rothbard admits that increases in the money supply can increase employment, and decreases can reduce it, while at the same time claims that that the quantity of money is always "optimal". Of course, employment temporarily does increase when you pump new fiat money into economy. But does that mean the higher quantity of money is more "optimal"? No, because the increased employment is part of the malinvestment bubble. Even if you pump new fiat money during downturn, you just prolong the dowturn, precisely because you don't allow employment to realign to consumer value scales.

3.4.2. The Incorrect and Controversial Aspects of the ABC

Caplan asks "why would any businessman make his profitability calculations based on the assumption that the low interest rates will prevail indefinitely?" Caplan overestimates businessmen's insight. Rothbard is correct that "[E]ntrepreneurs are trained to estimate changes and avoid error", but it is a huge challenge even in a free market environment. And when government starts to intervene? That would require literally devine insight.

That is actually just a light version of Caplan's view on the lack of economic calculation described previously. He does not consider it a big problem in a socialist country. So why would he consider it a problem in a relatively capitalist country, but ridden with government monetary aggression? Simple, why don't businessmen just "forecast government policy"!

Caplan says "Moreover, even if most businesspeople don't understand that low interest rates are only temporary, the long-term interest rate will still be a good forecast so long as the professional interest rate speculators don't make the same mistake." As we can see even from the most recent downturn, professional interest speculators do keep making the same "mistake". You cannot foresee the exact influence of current government intervention. Yes, it will sooner or later lead to some sort of a downturn, to a bubble burst. But no one can ever know when the burst will actually happen, how severe it will be and how long it will last. Not only because no one can predict the actual future effects of current government intervention, but also because no one can predict future new government interventions themselves which will again generate new unpredictable effects on the economy. In short, when government intervenes, there are no rules any more which would "weed out businesspeople with such a gigantic blind spot".

If Caplan were ever an entrepreneur, or even a board member, he would not be ignorant of the pressure to make money now, rather than "refrain from making investments which would be profitable only on the assumption that interest rates will not later rise". Try to explain to your shareholders that! Competition is making money but you won't join in because interest rates may rise in the future! Hey, let's just "make investments which will be profitable even though interest rates will later rise". How easy, let's just focus on the most profitable investments! After all, there are so many of them because no one has thought of them before! Why do we have to pursue all the risky and less profitable investments? Genius! Simply set up a company and get rich, the sky is the limit for Caplan!

This is all typical for mainstream economists desperatly trying to make calculus work for humans. Their neat mathematical models first ignore entrepreneurs. Then they accuse entrepreneurs they are not devine entities and fail to perfectly foresee all the effects of all government intervention, past, current and future. In other words, their can think of only two cases, either there are no entrepreneurs or entrepreneurs are Gods. Reality check please!

Next Caplan asks "why don't the consumption goods industries enjoy a huge boom during depressions? After all, if the prices of the capital goods factors are too high, are not the prices of the consumption goods factors too low?" Which consumption goods industries? Those that reflect real consumer value scales do enjoy a boom while the economy restructures during depression. For example, the most recent depression was a boon to Wal-Mart.

Then Caplan points to "Austrian theory's inability to explain why output declines during a depression; instead, it predicts a short-term increase." Output of what products? Output of products that reflect real consumer value scales do increase, but total output decreases (along with total employment) while the economy restructures.

Strange as it sounds, Caplan's another reason not to be an Austrian Economist is that neoclassical economics "offers a simple alternative explanation" why capital goods industries suffer more than consumer goods industries during depressions. As Einstein has once said, make everything as simple as possible, but not simpler. Look, here is a theory that occasionally happens to explain this or that in a more simplistic way than Austrian School, so even though the theory is just a bunch of incoherent mathematical models that in fact have little to do with reality, let's embrace it!

Same for stagflation, so what that "there were numerous theoretically rigorous explanations of stagflation"? I don't want "numerous" explanations of this or that. I want one single coherent theory that explains the whole economy. Only Austrians can offer such.

Finally, Caplan states that modern mainstream academic economists have now learned everything Austrians contributed to economics, and now only "government officials, journalists, the general public, and weaker academics still need to learn this lesson". Maybe, just maybe, the reason is mainstream economists do not promote the lessons "as boldly as Mises or Rothbard would"? Maybe, just maybe, the reason is government officials, journalists, the general public, and weaker academics keep stating there are "numerous" and "alternative" explanations of economic phenomena, so no one really knows which theory is really correct? Just a theory...

4.1. The Theory and Practice of Economic Theory

Strange as it sounds, Caplan's reason not to be an Austrian Economist is that "Austrian methodological criticisms of neoclassical economics are often wide of the mark precisely because mainstream economists don't practice the methods they preach". Look, here is a theory that does not practice what it preaches, let's embrace it!

4.2. Is Theory Enough?

Caplan says "Mises and Rothbard however err when they say that economic history can only illustrate economic theory. In particular, empirical evidence is often necessary to determine whether a theoretical factor is quantitatively significant. " There is no contradiction. The determination of whether a theoretical factor is quantitatively significant is precisely part of illustrating economic theory. So even though, "as Mises and Rothbard emphasize, economic theory tells us nothing about how big the increase in unemployment will be", they have never claimed empirical studies are completely useless. They have "merely" said they are useless to deduce economic theory.

4.3. Mathematics, Econometrics, and the Progress of Economics

Similarily, "the principled Austrian objections to mathematics and econometrics" means merely that econometrics "must become a subordinate tool of the economic historian rather than vice versa".

Caplan lists examples of "a few of the best new ideas to come out of academic economics since 1949", but then admits that in each of them "intuition, not math, probably played the leading role" and that "the contributions of econometrics to economics are similarly meager".

So here is the most absurd part, Caplan's reason not to be an Austrian Economist is that even though he basically agrees with Austrians, he does not agree in principle. Wow.

Conclusion:

"While the substantive contributions of Austrian economists to economics are significant, their sum from Human Action on is small compared to the progress that neoclassical economics has made over the same time period."

The progress in catching up with Mises' Human Action, published in 1949... They keep getting closer, maybe in a couple of decades they'll finally get there. Now as for Rothbard's Man, Economy and State, published in 1962, I would say not before the end of 21st century.

Finally, Brayan Caplan says, "I also consider the economics of Mises and Rothbard to be a great achievement in spite of my numerous reservations about it." That's a good summary of his whole essey. He is not an Austrian economist because current modern neoclassical economics is slowly catching up with Austrians. He is not an Austrian economist because neoclassical economists do not actually practice the methods neoclassical economists themselves preach. He is not an Austrian economist because there exist some alternative explanations to this or that phenomena. He is not an Austrian economist, even though he basically agrees Austrians, because he somehow cannot accept Austrian principled approach.

Austrian economics? Okay, but quietly, and let's find some alternative mathematical models first. The more math the better, tons of calculus, smoke and mirrors. Austrian principles? No way!

czwartek, 6 stycznia 2011

More Cheap Funny Drugs

No, this is not about AIDS drugs, they are not funny at all. I'm talking about the whole assortment of acids, marihuana, amphetamines etc. Why do we need more funny drugs? C O M E D Y.

I often wonder why there is so little really good comedy out there? TV keeps spouting tons of overacted miserable stuff that only retarded guys find funny. Are there so many retarded producers? Are there so many retarded viewers? Why comedy industry seems to bo so focused on that niche market of retarded people? They rarely even make their own purchasing decisions. The only alternative explanations are that either comedy producers have creativity problems or viewers can't comprehend good comedy, so there is no demand for it. Or both.

Now, hallucinogens are not patented like AIDS drugs, so they would be dirt cheap if they were not criminalized.

Can you imagine the comedy world where drugs are legal and cheap? Can you imagine the creativity of millions of artists if there were no social stigma currently associated with drug abuse? Don't have good ideas? Abuse some hallucinogens! We'd even have a whole new industry that optimizes drug abuse to achieve best comedic results. Free market at work!

Can you imagine how the ability of viewers to comprehend good comedy would increase? You don't get it? Abuse some hallucinogens! You're not that stupid, you just need to loosen up!

So here is another example how collectivist measures deprive us of what's most important in life: quality comedy time. We find our lifes increasingly boring, everybody follows the same social rules. 21'st century poses huge comedic challenges for humanity. Almost everything funny seems to have been produced already. We need new fresh ideas coming and fast.

We need to legalize drugs before our great civilization dies of boredom! What are we afraid of? That we'd end up with only half as many prisons as now? That the police would finally focus on victim crimes? That we no longer have mafia turf wars? No more drug addicts stealing and robbing (sober as sober can be) so they can afford expensive illegal drugs?

Have you ever been attacked or even threatened by someone who is actually high? No, guys who are high are hilarious! I can't even imagine anyone less dangerous. Fuck, yeah, funny and safe, that's what our civilization so badly needs to survive.

środa, 5 stycznia 2011

Bread & Butter

I've just made myself bread with margarine, nothing else. Just fresh unhealthy white bread plus artificial butter, delicious. What's so magical about bread and butter? 2 ingredients. I usually say 3 ingredients make for a perfect dish. Like in KFC, you need chicken, fries and barbecue sauce to be happy. But here we can get away with just 2. So what does that have to do with with liberty? Bread and butter proves the world is occasionally simpler than we usually think it is. You never know. You keep coming up with elaborate explanations. But no, you've just fucked up some simple thing, that's why.

So let's get to the point, liberals and conservatists are just plain stupid. Fuck, yeah. Want some scientific proof? Here you go:

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1665934

Now, if you are a liberal or conservatist, don't get me wrong. You are probably successful in some area. You may have some great intellectual insights. In fact, many people I admire are democrats or republicans. Still, you are stupid as far as economy is concerned. You use more "disgust, empathic concern, and neuroticism" and less "utilitarianism, need for cognition, and systemizing" than libertarians do, what was to be demonstrated.

So think about that, each time you make yourself bread and butter, for lack of other ingredients left in the fridge.