Austrian Economics - PhD student

[Warlord]

That still doesn't sound very scientifical. I can't imagine a geologist describing big rocks as successes and small ones as failures.

What do you mean by the word "fail"?

It's a failure because you can't print it, create more of it, fractional reserve it, run deficits, wage wars and run Ponzi schemes.

This is how these stupid idiots think remember. They believe in death and destruction throughout the world and a massive welfare state at home and crave a way to pay for it all in a dishonest and scheming way which makes society poorer. Fiat money allows them to do that.

[erowe1]

They believe in death and destruction throughout the world

That's really what I was getting at. The guy was acting like his objections to free markets were based on some kind of dispassionate pure science. But where he was heading was to show us a set of values that were anything but that.

If a person thinks the health of an economy can be measured with things like GDP and employment, then of course WW2 was great for the economy. But to do that they have to pretend that spending money to blow things up is as good as spending it for anything else, and conscripting someone as cannon fodder is as good as any other job.

[Warlord]

That's really what I was getting at. The guy was acting like his objections to free markets were based on some kind of dispassionate pure science. But where he was heading was to show us a set of values that were anything but that.

If a person thinks the health of an economy can be measured with things like GDP and employment, then of course WW2 was great for the economy. But to do that they have to pretend that spending money to blow things up is as good as spending it for anything else, and conscripting someone as cannon fodder is as good as any other job.

I dont think they go to war because they think it's good for the economy it's because they're genocidal maniacs and just plain criminals.

Fiat money lets 'em finance it.

This is just todays sampling:

http://www.ronpaulforums.com/showthr...te-a-War-Crime

http://www.ronpaulforums.com/showthr...s-Tin-Soldiers

[dannno]

I'm about to get a degree.

Your argument falls apart once you introduce externalities, public goods, several other game-theoretic examples, etc. You basically argue that the prisoner's dilemma does not exist in real life and that it's impossible to construct a scenario where there is a solution which every individual would prefer to the initial situation but which could not come about by free trade.

Dude, have you not heard of the stock market? And you're about to get an economics degree? What situation cannot come about by free trade, I have no idea what on earth you are talking about.

[dannno]

I'm about to get a degree.

Your argument falls apart once you introduce externalities, public goods, several other game-theoretic examples, etc. In neo-classical economics the Coase-theorem argues that without transaction costs this would actually always be the case. However, it's pretty easy to argue that in real life there always are transaction costs and that the efficiency of free market solutions therefore depends on how low or high they are.

Walter Block and Guido Hülsmann try to adress those issues in their follow-up pieces to Caplan's arguments. You need to go pretty deep into the basics (epistemology, philosophy of science, etc.) in order to get their arguments. What they argue is that there is no way to know whether one state is prefered over the other, unless people act accordingly. Caplan argues that this does not need to be true. He could rank every imaginable action/allocation/outcome in his head and know that there are some that are better than the one that he chooses, because the better ones are not reachable without the use of force. Dr. Block dismisses this argument because he argues that there is no basis on which to judge whether or not other people prefer one state over the other unless they act and he also points out that their preference relations can change as time goes on and that therefore asking them after a forceful redistribution makes no sense. Etc. pp.

They then go on and discuss the difference and importance of analytical / synthetical, a priori / a posteriori statments and probability theory as a foundation for science, etc. The whole debate admittedly goes a little bit over my head (I understand their points but I'm by no means equiped to make a judgement on whose arguments are "correct" or on which side "won" this debate).

Of course I could be misrepresenting their views by shortening it so extremely. Go ahead and read the responds yourself if you're interested.

I think it goes beyond Block's argument that there is no way to know. In a free market you get more savers and people who have savings will always be looking to invest, I don't understand this whole notion about being able to do things that a free market could not.

The only thing I can think of that would work in your favor of your argument would be eminent domain, but I think that's immoral, nothing to do with Austrian Economics, you're not going to change my mind on that.

[Danan]

Dude, have you not heard of the stock market? And you're about to get an economics degree? What situation cannot come about by free trade, I have no idea what on earth you are talking about.

I think it goes beyond Block's argument that there is no way to know. In a free market you get more savers and people who have savings will always be looking to invest, I don't understand this whole notion about being able to do things that a free market could not.

The only thing I can think of that would work in your favor of your argument would be eminent domain, but I think that's immoral, nothing to do with Austrian Economics, you're not going to change my mind on that.

Neo-classical theory knows a whole host of issues where the free market would supposedly not result in Pareto-efficient states. Public goods, negative externalities, etc.

Personally, I'm an anarcho-capitalist (sort of) and I agree that applying force - even if it where to result in a situation where every single individual is better off - is wrong. But that's not an economic issue, it's a moral one.

That doesn't change the fact that we can concieve a scenario where one good would not be supplied "sufficiently" because of free rider problems, etc. Personally I believe that the free market and private contracts are almost always better suited to resolve those issues than the government (which is by no means efficient itself). And Dr. Caplan might even agree with me here. That's not the issue here.

[Henry Rogue]

Neo-classical theory knows a whole host of issues where the free market would supposedly not result in Pareto-efficient states. Public goods, negative externalities, etc.

Personally, I'm an anarcho-capitalist (sort of) and I agree that applying force - even if it where to result in a situation where every single individual is better off - is wrong. But that's not an economic issue, it's a moral one.

That doesn't change the fact that we can concieve a scenario where one good would not be supplied "sufficiently" because of free rider problems, etc. Personally I believe that the free market and private contracts are almost always better suited to resolve those issues than the government (which is by no means efficient itself). And Dr. Caplan might even agree with me here. That's not the issue here.

Yeah that lousy Free Market never would have given us atomic bombs or gas chambers capable of killing millions of people or land guys on the moon and bring them back. I think I would rather risk the Free Market, give it a try once.

Peace.

[bolil]

What is your solution then, an utter failure like gold standard?

Free markets. Whatever the most efficient facilitator of indirect transactions happens to be. Gold, Silver, Salt, and Copper would all be up there, and owing to the advance of technology Lithium would probably be up there too. Of course localities would probably develop vastly different forms of local currencies, which would suffice for local business. Even fiat/computer money as we are forced to use now would be seen, except competition from harder forms of money would keep the handlers of such more conservative.

You love the central bank, that is fine, taking away its monopoly doesn't mean it will disappear. You would still be able to have circle jerks with your keynsian pals!

[dannno]

Neo-classical theory knows a whole host of issues where the free market would supposedly not result in Pareto-efficient states. Public goods, negative externalities, etc.

Yep, and that is the ENTIRE PROBLEM with the the people who preach neo-classical theory, it makes their "God complex" show. THEY cannot PERSONALLY imagine how the free market could take care of 'public goods', negative externalities and free rider problems, so in all of their prideful all-knowingness they declare that a small group of smart people have to make everybody else's decisions for them. That entire concept, if you take it to its logical end, leads to communism.

Austrians believe that the reason why free markets haven't taken care of a lot of the issues we face in society today comes purely from the fact that government has created barriers and monopolies, including regulations and removing investment capital, from allowing the free market to provide those solutions.

[dannno]

So what neo-classical economists don't realize is that millions of other people working on solving those market problems which they cannot personally solve in their head can lead to market solutions which can be implemented and adopted universally and voluntarily. These systems will be much better, ultimately, than anything a group of government bureaucrats will come up with.

[jclay2]

So what neo-classical economists don't realize is that millions of other people working on solving those market problems which they cannot personally solve in their head can lead to market solutions which can be implemented and adopted universally and voluntarily. These systems will be much better, ultimately, than anything a group of government bureaucrats will come up with.

Right on Danno! Government fails at everything it does, yet I am supposed to be convinced that I need more government and higher taxes. What modern economics fails to see is that the macro economy is a larger representation of the micro economy. They will say that borrowing a couple thousand on a credit card is bad for an individual but borrowing tens of trillions as a nation (100s of thousands per individual) is ok.

[cubical]

The entire idea of you calling out an economic school of thought for not being scientific is a huge part of your problem.

[BAllen]

Low interest rates were caused by savings, external savings. And btw, you continue to model behavior, going against your own theory "interest rates creates business cycle - people undertake longer term projects"

Oh, and that video doesn't impress anyone. A broken clock is right two times a day. These guys have been predicting doom for 30 years, eventually you are going to be right.. but what about the other 25 years you were wrong? And anyone who followed his instructions to short on the dollar in 2008 lost a lot of money, not to mentiion the hyperinflation stand-up comedy.

I agree with you on that. These doomsday predictors have been playing that broken record for some time now.

[cubical]

I agree with you on that. These doomsday predictors have been playing that broken record for some time now.

Didn't you see 2008?

What the doomsday predictors like Schiff are predicting are once in a generation kind of event. He had been harping about the housing bubble for years before it happened. To say during those 5 or so years "Oh Peter, eventually you will be right" is stupid. Housing bubbles like he nailed and the debt bubble he is now calling aren't items that come around once a decade or so.

[tmg19103]

Why is it only the Austrian's saw this mess coming?

http://youtu.be/2FyfAQ75GaQ

[dannno]

In the gold standards case, it falls into the "miserable failure" category

Why would you assume anybody here supports the gold standard? Ron Paul is against the gold standard.

[wizardwatson]

I'm calling it. Troll wins.