Monday, August 29, 2011

The “Dreaded” Post Keynesians?

In my various readings of the blogs that I find interesting, I just came across these remarks (that I seem to have missed) by George Selgin on the Free Banking blog referring to the debate that I recently had with Selgin here in the comments section of my blog on the Keynes versus Hayek LSE debate:
“At Social Democracy a post-Keynesian blogger who styles himself ‘Lord Keynes’ similarly misinterpreted my ‘liquidationist’ stand, inviting what became a long exchange with me there that was interesting in part because by engaging in it I learned that trying to argue with a dreaded Post-Keynesian can after all be a lot more rewarding, as well as a lot more pleasant, than trying to argue with many Rothbardians!
George Selgin, “The Keynesians Answer Back,” August 5th, 2011.
I did indeed make an error in my original post on Selgin’s position, but I was happy to correct it. And it was a pleasant surprise to find that Selgin’s position on the bailouts was one that a Post Keynesian could readily agree with. In actual fact, debating Selgin was a pleasure, and so much more rewarding than the blathering nonsense that one normally encounters from Rothbardian anarcho-capitalists.

But Selgin refers to the “dreaded” Post-Keynesians? Why “dreaded”?

It has long been known that the radical subjectivist wing of the Austrians and the Post Keynesians have ideas in common. In fact, the Austrian moderate subjectivists O’Driscoll and Rizzo tried to reach out to Post Keynesians in their book The Economics of Time and Ignorance with this comment:
“[i]t is evident that there is much more common ground between post-Keynesian subjectivism and Austrian subjectivism …. the possibilities for mutually advantageous interchange seem significant” (The Economics of Time and Ignorance, Oxford, UK, 1985, p. 9).
The “possibilities for mutually advantageous interchange” seem real to me, but there is so much mutual hostility from both sides that dialogue rarely comes to anything, mainly because Austrian economics is hijacked by the Rothbardian cult.

But I would like to think that the Austrians and Post Keynesians can learn from each other, even if obstacles remain. Ludwig Lachmann seems to be an Austrian whose work should be seriously examined by Post Keynesians.

Another point is that aspects of the Austrian/libertarian critique of Roosevelt’s New Deal, particularly those of Robert Higgs, are quite reasonable in some ways, especially since Keynes himself was also critical of the New Deal. There was undoubtedly some degree of “regime uncertainty” caused by the unprecedented interventions of Roosevelt’s New Deal which had never been seen before in America. When Keynes visited America in 1934, he saw first hand something that would confirm Higg’s view:
“[sc. Keynes] acknowledged that some aspects of the New Deal had created a crisis of confidence in the business community, but turned this into an argument that the government should increase its emergency expenditure to $400m. a month, while trying to reassure business that ‘they know the worst’ and discontinuing some aspects of the objectionable policies of the National Recovery Administration.” (Skidelsky 1992: 508).
The truth is that certain aspects of the New Deal had little if anything to do with Keynesianism. The New Deal came out of different ideas and types of thinking, and one of these was the sort of American corporatism/cartelism that even Herbert Hoover had supported to some extent. The solution to Roosevelt’s troubles was simply stopping his anti-business rhetoric and ending many of his counterproductive programs, and concentrating on fiscal stimulus, just as Keynes advised.

BIBLIOGRAPHY

Skidelsky, R. J. A. 1992. John Maynard Keynes: The Economist as Saviour, 1920–1937 (vol. 2), Macmillan, London.

86 comments:

  1. Thank goodness for your position on the New Deal. I always knew you were among the most balanced Keynesian bloggers on the internet.

    A long time back, I stumbled upon a blog of a person called Mike Haben, after clicking one of the profile links on either this or another similar blog. I remember him making the fallacies that you address. He was saying that the New Deal was a Keynesian program, an outright ahistorical statement given Keynes' own views about the National Industrial Recovery Act.

    It was in a post about Amity Shlaes' book, which he was criticising not because he read it, but because anyone criticising the New Deal was probably some biased free marketer - even though Shlaes makes a point about business uncertainty that non-free-marketers also make.

    Indeed, even though economists have rightly pointed out the business uncertainty effects of the recent Obama administration, under which a radical policy might be discussed for two months before following onto another different radical policy, some of his progressive advisors have simply dismissed that as anti-worker, anti-healthcare propaganda. As if progressive economists aren't aware of business uncertainty as well.

    It's astonishing that some relative radicals of the Austrian and Post Keynesian School are able to make moderate, balanced points, while mainstream centrist members of the establishment are behaving like extremists who immediately reject opposing views.

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  2. Can we all agree that the raising of taxes by Hoover (which continued to stay high under FDR) was not exactly a "Keynesian" solution to a severe downturn?

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  3. Lord Keynes,

    I recently stumbled upon your blog. Although I have little background in economics (instead physical sciences), I'm trying to learn more in my free time. I've found your posts thusfar to be very interesting and look forward to learning more and participating more as I do.

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  4. "Can we all agree that the raising of taxes by Hoover (which continued to stay high under FDR) was not exactly a "Keynesian" solution to a severe downturn? "

    "Not exactly" a Keynesian solution is an understatement:

    "Hoover actually ran a budget surplus in the fiscal year 1930, not a deficit. Hoover’s first deficit was in fiscal year 1931, when the US economy had already begun contracting severely. He also cut spending in fiscal year 1933, and introduced the Revenue Act of 1932 (June 6) which increased taxes across the board and applied to fiscal year 1932 and subsequent years. These were highly contractionary measures, and these two policies are the very antithesis of Keynesianism!"

    http://socialdemocracy21stcentury.blogspot.com/2011/05/herbert-hoovers-budget-deficits-drop-in.html

    ReplyDelete
  5. "GammaPoint said...
    I recently stumbled upon your blog. etc


    Some basic posts:

    http://socialdemocracy21stcentury.blogspot.com/2010/07/three-varieties-of-keynesianism.html

    http://socialdemocracy21stcentury.blogspot.com/2010/07/quantity-theory-of-money-critique.html

    http://socialdemocracy21stcentury.blogspot.com/2010/10/myth-of-says-law.html

    http://socialdemocracy21stcentury.blogspot.com/2010/10/economics-and-ethics-brief-survey.html

    http://socialdemocracy21stcentury.blogspot.com/2011/01/overview-of-major-schools-of-economics.html

    http://socialdemocracy21stcentury.blogspot.com/2011/01/f-h-hahn-in-candid-moment-on-neo.html

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  6. Thanks for those. I'll take those with my morning coffee later this week.

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  7. The truth is that certain aspects of the New Deal had little if anything to do with Keynesianism.

    You mean wanting men with guns to have sole authority on where and how money is spent, tends to follow their own individual values and goals, rather than some nonsensical Keynesian worldview where Keynesian policies are only practiced if you had the power to spend the money yourself?

    Seems like only the Austrians realize that individual utility is the ultimate foundation for economic action.

    The New Deal came out of different ideas and types of thinking, and one of these was the sort of American corporatism/cartelism that even Herbert Hoover had supported to some extent. The solution to Roosevelt’s troubles was simply stopping his anti-business rhetoric and ending many of his counterproductive programs, and concentrating on fiscal stimulus, just as Keynes advised.

    Even if "fiscal stimulus" were concentrated on, that still would not have fixed the economy. Only economic calculation can fix economies, and economic calculation is only possible in the sphere of private property exchanges, not funny money brought about by coercing everyone under legal tender laws. Every act against private property economic calculation necessarily distorts and impairs the process of recovery and correction.

    Fiscal spending does not and cannot cure economic problems. All it can do is benefit a few people in the short term, namely, those who print and spend money, and their friends. Everyone else has to support these few people's consumption brought about by the new money that was not acquired in exchange, but from a printing press or from taxing producers.

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  8. "Even if "fiscal stimulus" were concentrated on, that still would not have fixed the economy. Only economic calculation can fix economies, and economic calculation is only possible in the sphere of private property exchanges, not funny money brought about by coercing everyone under legal tender laws."

    You're the perfect example of the Rothbardian cultist. Contrast your theology with what Lachmann thought:

    Policies based on Keynesian macro-economic recipes might have succeeded (had they then been tried) in 1932 and did succeed in 1940 because it so happened that at the bottom of the Great Depression as well as during the Second World War all sectors of the economy were equally affected. In 1932 any kind of additional spending on whatever kind of goods would have had a favourable effect on incomes because there was unemployment everywhere, as well as idle capital equipment and surplus stocks of raw materials.

    Lachmann, L. M. 1973. Macro-economic Thinking and the Market Economy: An Essay on the Neglect of the Micro-Foundations and its Consequences, Institute of Economic Affairs. p. 50.

    Your view wouldn't even command assent from all Austrians, so don't appeal in a blase way to "the Austrians".

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  9. If they 'dread' you it means you are challenging them.

    Unfortunately we can only get closer to Austrians once they:

    a) Abandon the gold standard.
    b) Think through their lip service to irreducible uncertainty.

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  10. The problem with people like Major Freedom is that they assume that you also believe that free markets will lead to prosperity. Instead, most believe that free markets will lead to starvation and misery. Based on his faulty assumption, he then asserts that all Keynesian WANT to "force" everyone by violence to do X,Y,Z. However, if one believes that free markets will lead to starvation and misery, it is only moral to interfere in the market by Keynesian or some other policy. Hell, if free markets lead to 60 percent unemployment (as they do in anarcho-Somalia), then give me a gun.

    Also, libertarianism is premised on the use of violence to protect private property. So this idea that only states commit violence is complete BS. Major Freedom's entire philosophy needs guys with big guns to protect capitalists and their property.

    Also, a private company IS NOT a person. This is important because Austrians assume that market interference is an attack on individuals. However, private companies are not people, THEY ARE INSTITUIONS.

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  11. "Even if "fiscal stimulus" were concentrated on, that still would not have fixed the economy. Only economic calculation can fix economies, and economic calculation is only possible in the sphere of private property exchanges, not funny money brought about by coercing everyone under legal tender laws."

    You're the perfect example of the Rothbardian cultist.

    Hahaha, that is not a valid response to my argument on economic calculation you idiot.

    A proper response would make a case as to how it is wrong, not to ad hominem the counter-party with "you are a cultist."

    Game set match.

    Roddis is right. You have ZERO answers to the problem that Mises brought up. It's not actually Rothbard's contribution, but Mises' contribution.

    Your view wouldn't even command assent from all Austrians

    It doesn't have to you idiot. Arguments stand alone, and must be critiqued as an argument standing alone. It has NOTHING to do with WHO communicates the argument.

    This crap about "not all Austrians agree" is just a stupid and lazy appeal to authority, or ad populum.

    Citing Ludwig Lachmann's statements, without showing any understanding of the argument of economic calculation, and pretending Lachmann's statements are definitive, solely because they agree with yours, is pathetic immature discourse, proving that you have no argument to make.

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  12. Anonymous:

    The problem with people like Major Freedom is that they assume that you also believe that free markets will lead to prosperity. Instead, most believe that free markets will lead to starvation and misery.

    Paging Stalin, Mao, Pol Pot, Hitler, and Castro, leaders of the most prosperous economies the world has ever seen...

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  13. Naming those communist monsters doesn't refute the argumnet that pure free trade can lead to mass starvation.

    Try reading:

    Mike Davis, Late Victorian holocausts: El Niño famines and the making of the third world

    A summary:

    Davis argues that "Millions died, not outside the 'modern world system', but in the very process of being forcibly incorporated into its economic and political structures. They died in the golden age of Liberal Capitalism; indeed, many were murdered ... by the theological application of the sacred principles of Smith, Bentham and Mill."

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

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  14. Naming those communist monsters doesn't refute the argumnet that pure free trade can lead to mass starvation.

    Claiming that the free market leads to mass starvation doesn't refute the argument that the free market leads to minimal starvation.

    A summary:

    Davis argues that "Millions died, not outside the 'modern world system', but in the very process of being forcibly incorporated into its economic and political structures. They died in the golden age of Liberal Capitalism; indeed, many were murdered ... by the theological application of the sacred principles of Smith, Bentham and Mill."


    Davis is wrong. He adheres to socialist ideology and has an ideological ignorance and bias of free markets.

    One cannot be FORCED into free trade. Free trade is a voluntary system. Free trade contains the freedom not to freely trade. If anyone is FORCED into free trade, it isn't actually free trade at all.

    Colonialism that violates existing property rights is not a free market action.

    Davis blames capitalism and free trade for "letting" millions of people die. But capitalism isn't responsible for anyone. It is not a parent. It is not a caretaker. It is a way for individuals to be free in pursuing their interests without being initiated with violence.

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  15. (1) Noet carfully:

    "...theological application of the sacred principles of Smith, Bentham and Mill."

    We are talking about Classical political economy, not Rothbardian dream worlds with no government.

    Just because it is not your Rothbardian "free market" fantasy world does not mean it isn't an example of real world capitalism.

    This "But, But, it is not the real free market!" line is as absurd as the die-hard Marxist who complains "The Soviet Union was not real Marxism!".

    "It is not a parent. It is not a caretaker. It is a way for individuals to be free in pursuing their interests without being initiated with violence

    And such a system can lead to mass unemployment, starvation, homelessless, and in some versions - like those of Robert Nozick and Walter Block - even slavery is moral.

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  16. (1) Noet carfully:

    "...theological application of the sacred principles of Smith, Bentham and Mill."

    We are talking about Classical political economy, not Rothbardian dream worlds with no government.

    Neither Smith, Bentham, nor Mill were imperialist economists. It's a straw man against them too.

    Just because it is not your Rothbardian "free market" fantasy world does not mean it isn't an example of real world capitalism.

    We don't have free markets, the system being criticized, in the real world. The real world is corporatist, imperialist, colonialist, communist, etc.

    To the extent that individuals are free to trade and free to not trade, that is where prosperity originates and what corporatism, imperialism, communism, etc depend on in order to even exist as sustainable, yet parasitical, systems.

    This "But, But, it is not the real free market!" line is as absurd as the die-hard Marxist who complains "The Soviet Union was not real Marxism!".

    No, it is not as absurd. That is a straw man. The Soviet Union was in fact a virtual word for word match of Marx's "raw communism" stage that he advocated for in his Paris Manuscripts. That he depended on the mythical "dialectic" process to spontaneously transform society from bloody dictatorship to stateless Utopia, which fails to materialize in the real world because there is no such thing as such a one-dimensional materialist dialectic force inherent in physical matter, does not mean that the tyrannies that were the communist countries in the 20th century (and North Korea today) aren't Marxist. They are. They just never got past the dictatorship phase and into statelessness.

    On the other hand, the argument that the free market process is continually violated, all over the world, especially and most significantly by governments, the very institutions who are responsible for what Davis is complaining about, where "free markets" are FORCED onto people through imperialist colonialism, is the exact opposite of the most crucial aspect of free markets, which is respect for private property rights.

    If private property rights are violated, especially systematically by governments, then the free market process itself has been abandoned, and one cannot claim that the free market is being practiced.

    Listen, I know that this relatively easy to understand fact BURNS YOU UP. I know how you feel. You're raging because you know you can't blame the free market for the problems you see, but governments instead. So you have to REDEFINE the free market to be whatever the fuck exists in the real world, so that you can blame the real world and hence the free market for the problems.

    Sorry, it doesn't work like that. Even if we don't consider anarcho-capitalism, and consider minarchist capitalism of the classical liberal type that folks like Smith and Bentham and Mill advocated, then you STILL could not blame "the free market", because none of these gentlemen were advocates of imperialism and IMPOSING "capitalism" on others by force of arms.

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  17. "It is not a parent. It is not a caretaker. It is a way for individuals to be free in pursuing their interests without being initiated with violence

    And such a system can lead to mass unemployment, starvation, homelessless

    You forgot alien invasions.

    How can the free market lead to mass unemployment, starvation, homelessness?

    You want to talk about mass unemployment, starvation, and homeless? How about the mass unemployment, starvation, and homeless under governments? I am not an advocate of minarchism, I am an advocate of anarcho-capitalism, so if you want to argue that minarchist state systems eventually lead to mass unemployment, starvation, and homelessness, then I will agree with you. It does, because minarchist systems are based on the fallacious notion that violence against innocent people can solve complex social problems.

    But my argument is that anarcho-capitalism does not lead to mass unemployment, starvation, and homelessness. Prove that argument wrong.

    and in some versions - like those of Robert Nozick and Walter Block - even slavery is moral.

    Voluntary slavery is a moral action according to Block. Block argues that if an individual chooses to enslave himself to someone else, in order to save the life of their child for example, then he should be able to do it without being physically stopped by anyone else. He doesn't advocate for slavery, he just argues that if an individual wants to become a slave, then they should be free to do it without asking anyone else for permission.

    Rothbard on the other hand considers voluntary slavery to be an oxy-moron. He held that any slave contract is null and void, even if the individual willingly agrees to become a slave.

    So your absolutist position against slavery is actually in full agreement with Rothbard.

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  18. "How can the free market lead to mass unemployment, starvation, homelessness?"

    (1) Say's law still would not work in a Rothbardian anarcho-capitalism fanstasy land.

    http://socialdemocracy21stcentury.blogspot.com/2010/10/myth-of-says-law.html

    http://socialdemocracy21stcentury.blogspot.com/2011/01/f-h-hahn-in-candid-moment-on-neo.html

    (2) Your economic theory subscribes to the same flawed axioms of neoclassical theory - the gross subsitiution especially

    http://socialdemocracy21stcentury.blogspot.com/2011/07/more-on-gross-substitution-axiom.html

    (2) Business would still face fundamental uncertainty and subjective expectations in the investment process. There is no reason why investment would not fluctuate in the way that it does on real world capitalist systems run on broadly neolcassical lines.

    There is no such thing as an equilibrium rate of interest or unique natural rate of interest in an economy out of equilibrium.
    You have the same false notions as neoclassicals: the idea that an increase in saving due to a fall in consumption will not decrease aggregate demand because there is a corresponding increase in investment in capital goods to compensate for the fall in consumption is an assumption underlying Say’s law, from which it is concluded that aggregate demand will remain the same and only its composition will alter. But subjective expectations in the investment decision destroy any such automatic process to create the necessary investment.

    http://socialdemocracy21stcentury.blogspot.com/2011/03/davidson-on-austrian-concept-of.html

    http://socialdemocracy21stcentury.blogspot.com/2011/07/more-on-gross-substitution-axiom.html

    (3) Your argument against fractional reserve banking is false. The anti-FRB Austrians such as Murray Rothbard hold a position that is incoherent and would require restriction of free contract and private enterprise – so in fact such Austrians, by their own demand for pure laissez faire – demand an “evil”, collectivist, anti-freedom ideology requiring limits on private liberty.

    http://socialdemocracy21stcentury.blogspot.com/2010/06/fractional-reserve-banking-evil.html

    http://socialdemocracy21stcentury.blogspot.com/2011/02/lawrence-h-white-refutes-huerta-de-soto.html

    http://socialdemocracy21stcentury.blogspot.com/2011/02/lawrence-h-white-refutes-huerta-de-soto.html

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  19. On a theoretical level a Rothbardian system would

    (1) return us to a world of sluggish eocnomic growth, with its 100% reserve banking system

    (2) still be subject to involuntary unemployment

    (3) with nothing but private charity there is no convincing reason why people unemployed in need of support would not starve or be homeless

    (4) with your demand for relentless deflation, there would be a penalising deflation tax on the producers and productive debtors in society who borrow money to increase output; debt deflation would be relentless.

    There would be powerful disincentives to capital goods investment. By holding money idle, you have a guaranteed return. The relentless deflation would after some years - say, a 100 years or so - see an astonishingly unequal and high disparity of wealth.

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  20. "How can the free market lead to mass unemployment, starvation, homelessness?"

    (1) Say's law still would not work in a Rothbardian anarcho-capitalism fanstasy land.

    Say's Law is not the foundation for the argument in favor of free markets you idiot. You are committing the same fallacy that Keynes committed. Henry Hazlitt exposed Keynes' errors:

    http://blog.mises.org/5833/the-failure-of-the-new-economics/

    in chapter 3

    and

    George Reisman also explains Say's Law with an example that almost all Keynesians would say refutes it:

    http://mises.org/resources/1006

    in chapter 13, Part B.

    In short, Say's Law is just a refutation, a negative, an argument against the fallacy that there can be a general overproduction of goods, rather than the truth, which is that there can only be partial, relative overproductions of some goods, and thus partial, relative underproduction of other goods.

    Say's Law is NOT the foundation for the argument in favor of free markets. It is, again, only a refutation of the claim that there can be a general overproduction of goods.

    (2) Your economic theory subscribes to the same flawed axioms of neoclassical theory

    Which "flawed axioms"?

    the gross subsitiution especially

    It is not necessary that there be one for one gross substitution between sectors and industries in order for the free market to accommodate full employment and generate economic growth. The "gross substitution" "refutation" is actually a "refutation" that takes for granted the Keynesian fallacy that consumption spending drives employment, when in reality it is saving and investment spending that drives employment.

    Consumption spending only DIRECTS where employment, that is financed by savings and investment, will go. From this industry to that industry. It doesn't GENERATE employment. If everyone spent 100% of their incomes on their own consumption, then the monetary demand for labor, and hence employment of labor, would collapse to zero.

    Consumption spending and investment spending ARE IN COMPETITION WITH ONE ANOTHER. They are mutually exclusive. But Keynesians believe that consumption spending IS spending for labor.

    "Demand for commodities is not demand for labor." - John Stuart Mill.

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  21. (2) Business would still face fundamental uncertainty and subjective expectations in the investment process. There is no reason why investment would not fluctuate in the way that it does on real world capitalist systems run on broadly neolcassical lines.

    Yes there is a reason why investment would not fluctuate in a free market, the way you see it fluctuate today. There would not be any central banks and there would not be any fractional reserve banking which blows up asset bubbles and inevitable collapses.

    Any "fluctuation" in investment that takes place on the free market would immediately generate market forces that reverses any fluctuation that is too far in any one direction. The uniformity of profit principle would tend to keep industries in relative balance.

    The fact that businesses would face uncertainty says nothing unique. Uncertainty is faced by governments no less than businesses, and in fact, governments are necessarily lacking of information relative to actual market participants, when it comes to the market participants own businesses and markets. Any uncertainty faced by businesses can only be greater for governments.

    Uncertainty is ubiquitous. To believe that violence, because it is "certain," can improve the lives of people who would otherwise be free and whose economic outcomes are not as certain as they would if they were robbed, or given free wealth, is no justification for looting. You'd only be fallaciously presuming that people are better off when they are victimized by violence with certainty, compared to facing an uncertain future on their own responsibility.

    The fallacy is that the unintended consequences of violence is itself uncertain, and just replaces the uncertainty of the individual in freedom. Instead of the individual being uncertain as to whether they will have a job tomorrow, they will be certain to be robbed, and then become uncertain as to the unintended effects of the robbery.

    There is no such thing as an equilibrium rate of interest or unique natural rate of interest in an economy out of equilibrium.

    Red herring. It is not necessary to the argument for free markets that there is a single natural interest rate. There can be one or a million natural interest rates, and the argument for free markets would remain unchallenged.

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  22. You have the same false notions as neoclassicals: the idea that an increase in saving due to a fall in consumption will not decrease aggregate demand because there is a corresponding increase in investment in capital goods to compensate for the fall in consumption is an assumption underlying Say’s law, from which it is concluded that aggregate demand will remain the same and only its composition will alter.

    Straw man in combination with continued ignorance of Say's Law.

    Straw man because I do not at all argue that every fall in consumption spending necessarily leads to an equal rise in investment expenditures. It is not necessary that it does to the argument in favor of free markets.

    Continued ignorance of Say's Law because Say's Law does not argue that every fall in consumption spending is matched with a dollar for dollar rise in investment expenditures.

    Say's Law is, to repeat, just a refutation of the fallacy that there can be a general overproduction of wealth. That's it.

    Now, if people did seek to abstain from consumption spending, and accumulate cash balances, and spend it later on, or even never, then all that will do is put into motion market forces that would make the production of capital goods relatively more profitable than the production of consumer goods. That will in turn redirect investment away from the production of consumer goods and towards investment in the production of capital goods, given the nominal investment that exists (since we presumed a fall in consumption spending only, then we must assume no change in investment expenditures).

    Since there would arise less aggregate spending in general, that would, in a free market where prices are not interfered with, reduce prices. If it does not reduce prices right away, then isolated "idle resources" and "voluntary unemployment" will arise and continually "punish" those who refuse to lower their prices. These forces will be relentless until people who were holding out on reducing their prices do in fact reduce their prices, after which they can continue on earning an income instead of waiting for a central bank to devalue other people's money so that they will raise prices, giving the wait-outs a reason to not ask for lower prices all along.

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  23. But subjective expectations in the investment decision destroy any such automatic process to create the necessary investment.

    I did not claim that wealth generation is "automatic." Wealth generation can only be carried out by purposeful individual action.

    At any rate, the individuals in the government are ALSO faced with subjective expectations you idiot, and not only that, they are more uncertain as to their actions because they don't operate in a profit and loss sphere, so they can't even know if what they are doing is creating net gains to people.

    (3) Your argument against fractional reserve banking is false.

    No, it's true. Your argument in favor of fractional reserve banking is false.

    The anti-FRB Austrians such as Murray Rothbard hold a position that is incoherent and would require restriction of free contract and private enterprise

    No, it would not. It is coherent (demand deposit contracts are not loan contracts, demand deposits do not transfer ownership rights to the money, loans do transfer the ownership rights of the money, etc), and it is not a restriction of free contract, because the free market does not contain the right for two parties to agree with each other to defraud others. Even if a client agreed with his banker to claim that his deposit is both a demand deposit and a loan, at the same time, such that the bank grants ownership rights to the client and to some third party, at the same time, then those who deal with the client and the third party are being defrauded when paid because they are ostensibly getting money, but in reality, they are getting a credit promise. Money is not a credit promise.

    The fraud is exposed whenever there is a bank run, and the bank's clients who are told they own the money in their demand deposit, are turned away because the bank misappropriated the money and gave it to someone else. So the client has to turn to the government, who will rob others and devalue the money supply through inflation again to "bail" the clients out. Since FDIC necessarily requires violence against innocent people who had nothing to do with a given bank's frb fraud, the fact that costs are imposed on others in order for the bank contracts to be made good is further evidence that frb is fraudulent.

    – so in fact such Austrians, by their own demand for pure laissez faire – demand an “evil”, collectivist, anti-freedom ideology requiring limits on private liberty.

    Nope. Not at all. To be against fraud is not to be against laissez faire.

    Laissez faire does not mean hands off of fraud and violence. It means hands off of peaceful, non-fraudulent exchanges.

    In summary, NOTHING of what you have said above is an argument that the free market generates mass unemployment, starvation, or homelessness. It's just a clusterfuck series of long refuted fallacies that have nothing to do with the question I asked you.

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  24. On a theoretical level

    This is what I actually asked for the first time. This ought to be good.

    a Rothbardian system would

    (1) return us to a world of sluggish eocnomic growth, with its 100% reserve banking system

    How does 100% reserve generate "sluggish growth" theoretically?

    (2) still be subject to involuntary unemployment

    How? All systems have occasional involuntary unemployment, except of course slave societies.

    (3) with nothing but private charity there is no convincing reason why people unemployed in need of support would not starve or be homeless

    You're fallaciously presuming that the total supply of people in need of support will never diminish in free markets.

    And even if there were starving people or homeless people, a statist system cannot stop it, because states do not produce wealth. There are hundreds of thousands of people starving to death in Africa, and they live under governments, and civilians in the US, where the market is more free, are donating.

    Donations are maximized in free markets.

    (4) with your demand for relentless deflation, there would be a penalising deflation tax on the producers and productive debtors in society who borrow money to increase output; debt deflation would be relentless.

    Deflation isn't a tax. Inflation is a tax. Deflation meaning gradually falling prices due to increased productivity doesn't mean that producers and productive debtors are "penalized."

    Producers earn profits by taking into account price differentials, not just the prices of consumer goods or capital goods. Investment is made where the prices of output are expected to exceed the prices of inputs. If there is a commodity standard of money for example, then prices will gradually decline for not only output, but for inputs as well. If the prices for both outputs and inputs gradually fall, then the DIFFERENCE will remain positive, and investments can be made.

    It is a monetary crank fallacy to hold that inflation avoids "punishing" producers. Inflation is a tax, not deflation.

    When it comes to debtors, prices gradually falling over time will just mean that instead of there being a positive addition to the rate of interest on account of inflation, there won't be any positive addition to the rate of interest on account of inflation. Interest rates will just tend to be lower than they are now in our inflationary monetary system.

    This will not "punish" debtors.

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  25. There would be powerful disincentives to capital goods investment. By holding money idle, you have a guaranteed return.

    So what? A reduction in the nominal amount of investment does not mean that production declines in real terms. If people accumulate and hold cash, then we must assume that their time preferences have not changed, which means the ratio between consumption spending and investment spending is unchanged.

    If people hold more cash by reducing their investment expenditures (since holding cash enables more consumption in the future than in the present), then this means time preference has risen, which means people desire more consumption in the present relative to consumption in the future (investment today). Since reducing investment relative to consumption spending will increase the relative rate of profit in consumer goods, that will lead investors to investing more for present consumption relative to future consumption, exactly matching consumer preference.

    Inflation does not produce a single new capital good. Inflation only REDIRECTS capital goods from where they otherwise would have been invested according to real consumer demand over time, to other uses instead that are the product of inflation itself and not real consumer demand over time. That will just require a future correction when the errors are realized, and generate a recessionary correction period.

    The relentless deflation would after some years - say, a 100 years or so - see an astonishingly unequal and high disparity of wealth.

    Utter nonsense. That prices gradually fall over time does not at all mean that wealth is transferred from poor to rich.

    It would mean that the only way you can become rich is by EARNING money, instead of being first in line to the printing press. If that means that wealth disparity will decrease, stay the same, or increase, is entirely irrelevant. You are making a value judgment on what the "proper" wealth disparity "should be", totally ignoring HOW wealth comes to be produced and HOW money comes to be earned.

    If a gold standard leads to some people become extremely wealthy while others are less wealthy, then that does not mean that the less wealthy are being exploited or robbed. It just means that they are producing as much or as fast as those who are more wealthy.

    You are implicitly admitting that inflation is really just a system of wealth transfer, away from those who earn money, i.e. the productive class like capitalists and workers, to those who did not earn the money, i.e. the unproductive class like the government and those the government gives money to.

    Thanks for admitting Austrians are right, LOL.

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  26. Keynesian fallacy that consumption spending drives employment,

    That is a laughable falsehood. You can't even get the Keynesian position right.

    Keynesianism doesn't say that "consumption spending drives employment".

    It says that effective demand/aggregate demand drives employment and output.

    aggregate demand = C + I + G + (E-M)

    Notice that "I"? Also the G and (E-M)?

    Don't expect to be taken seriously until you show basic familiarity with Keynesian theory.

    ReplyDelete
  27. "I did not claim that wealth generation is "automatic."

    Game over. You lose.

    "Say's Law is, to repeat, just a refutation of the fallacy that there can be a general overproduction of wealth. "

    According to whom? Some ignorant clod like you?

    I'll look to the writings of J. B. Say himself to tell me what Say's law is about, thanks:

    "Every producer asks for money in exchange for his products, only for the purpose of employing that money again immediately in the purchase of another product; for we do not consume money, and it is not sought after in ordinary cases to conceal it: thus, when a producer desires to exchange his product for money, he may be considered as already asking for the merchandise which he proposes to buy with this money. It is thus that the producers, though they have all of them the air of demanding money for their goods, do in reality demand merchandise for their merchandise" (Say 1816: 103–105).

    When the producer has put the finishing hand to his product, he is most anxious to sell it immediately, lest its value should diminish in his hands. Nor is he less anxious to dispose of the money he may get for it; for the value of money is also perishable. But the only way of getting rid of money is in the purchase of some product or other. Thus, the mere circumstance of the creation of one product immediately opens a vent for other products (Say 1832: 134–135).

    And also to the recognised experts on Say's law, like Baumol and Sowell:

    “(1) The total factor payments received for producing a given volume (or value) of output are necessarily sufficient to purchase that volume (or value) of output [an idea in James Mill].

    (2) There is no loss of purchasing power anywhere in the economy. People save only to the extent of their desire to invest and do not hold money beyond their transactions need during the current period [James Mill and Adam Smith].

    (3) Investment is only an internal transfer, not a net reduction, of aggregate demand. The same amount that could have been spent by the thrifty consumer will be spent by the capitalists and/or the workers in the investment goods sector [John Stuart Mill].

    (4) In real terms, supply equals demand ex ante [= “before the event”], since each individual produces only because of, and to the extent of, his demand for other goods. (Sometimes this doctrine was supported by demonstrating that supply equals demand ex post.) [James Mill.]

    (5) A higher rate of savings will cause a higher rate of subsequent growth in aggregate output [James Mill and Adam Smith].

    (6) Disequilibrium in the economy can exist only because the internal proportions of output differ from consumer’s preferred mix—not because output is excessive in the aggregate” [Say, Ricardo, Torrens, James Mill] (Sowell 1994: 39–41).

    Not some idiot who has no idea what he's talking about.

    http://socialdemocracy21stcentury.blogspot.com/2010/10/myth-of-says-law.html

    ReplyDelete
  28. "Any "fluctuation" in investment that takes place on the free market would immediately generate market forces that reverses any fluctuation that is too far in any one direction."

    False. Unless you banish subjective expectations by facing a world of certainty there is no theoretical reason why investment would not be subject to fluctuation in a Rothbardian anarcho-capitalist system.

    ReplyDelete
  29. "To believe that violence, because it is "certain," can improve the lives of people who would otherwise be free and whose economic outcomes are not as certain as they would if they were robbed, or given free wealth, is no justification for looting."

    You retreat to your moral arguments. Your naturla righst ethics or Hoppe's argumentation ethic is invalid and unconvincing.

    Moroever, it has alreay been shown to you that the vast majority of people do not regard taxes as theft. They don't regard it as theft or violent coercion.

    "You'd only be fallaciously presuming that people are better off when they are victimized by violence with certainty, compared to facing an uncertain future on their own responsibility."

    LOL!! Why don't you ask people whether they feel that the universal health care systems they enjoy, the social security benefits that allow to to SURVIVE when they unemployed or sick, and the law and order provided by the state that protects them and their famalies is just some horrible "victimization by violence".

    You ravings have no relation to the real world. Take tax as just one example:

    “The IRS Oversight Board conducted an independent poll in 2005 that found 96 percent of the respondents agreed ‘it is every American’s civic duty to pay their fair share of taxes.’

    The Pew Research Center in a similar study in 2006 found 79 percent of the respondents said that cheating Uncle Sam was ‘morally objectionable.’
    (Maxwell 2000: 146).

    Get it? Paying taxes is widely considered THE moral thing to do.

    It's ethical justification is EASILY provided by any number of ethical theories - Rawl's human rights ethics, utilitarianism, Kantian ethics, etc

    ReplyDelete
  30. "And even if there were starving people or homeless people, a statist system cannot stop it, because states do not produce wealth."

    Of course a system of social security stops starvation and homelessness.

    In societies that are currently very poor there may well be issues of scarcity - which any free market system also face.

    That is totally different question to the issue of social security systems in most modern Western or industrialised countries. There is no reason why anyone needs to starve or be homeless in societies where basic commodities are relatively abundant.

    ReplyDelete
  31. "If people hold more cash by reducing their investment expenditures (since holding cash enables more consumption in the future than in the present), then this means time preference has risen, which means people desire more consumption in the present relative to consumption in the future (investment today)".... etc

    An evasion. The issue was that continued deflation gives people have a guaranteed return to by KEEPING money idle. They do not need to risk their money on capital goods investment even if profit opportunities rise, since they have a guaranteed return by keeping it a warehouse and NOT lending it.

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  32. "Deflation meaning gradually falling prices due to increased productivity doesn't mean that producers and productive debtors are "penalized."

    Yes it is. If you pay back loans in money of higher value later (when it can purchase more), you are experiencing a "tax", transferring extra money to your bank or creditors.

    ReplyDelete
  33. Lord Keynes,

    Are there any good books out there that you would recommend giving a post-keynesian approach to the problems that the world economy is facing and how to approach them? Maybe something like 'The Keynes solution' by Davidson? Something that isn't too complex as I'm a beginner would be great.

    Thanks.

    ReplyDelete
  34. Davidson's book is probably one of the best! It is very readable and aimed ta the general reader:

    With Davidson, also try Robert Skidelsky's book:

    Skidelsky, Robert J. A. 2010. Keynes: The Return of the Master (rev. and updated edn.), Penguin, London.

    Davidson, Paul. 2009. The Keynes Solution: The Path to Global Economic Prosperity (1st edn.), Palgrave Macmillan, New York and Basingstoke.

    A good summary of Skidelsky's book here for the beginner:

    http://www.skidelskyr.com/site/article/the-relevance-of-keynes/

    If you want more advanced treatments in textbooks, see here:

    http://socialdemocracy21stcentury.blogspot.com/2011/07/post-keynesian-textbooks.html

    Try:

    Keen, S. 2001. Debunking Economics: The Naked Emperor of the Social Sciences, Zed Books, New York and London.
    (This is coming out in a new, updated edition this year)

    Lavoie, Marc. 1994. Foundations of Post-Keynesian Economic Analysis (new edn), Edward Elgar Publishing.

    Palley, Thomas I. 1996. Post Keynesian Economics: Debt, Distribution, and the Macro Economy, St. Martin’s Press, New York.

    Davidson, Paul. 2011. Post Keynesian Macroeconomic Theory: Foundation for Successful Economic Policies for the Twenty-First Century (2nd edn), Edward Elgar Publishing, Cheltenham.

    In general also try Post Keynesian blogs, where you can read nice short analysis aimed at general readers:

    http://socialdemocracy21stcentury.blogspot.com/2010/07/post-keynesian-resources.html

    ReplyDelete
  35. Isn't it weird that Post-Keynesian policy prescriptions are completely at odds with the Austrian ones? I don't want to say, btw, that Austrian economics or Post-Keynesian economics are normative disciplines. But that Austrian economists are mostly ultra capitalists (not even of the Friedmanite kind) and that Post-Keynesian economists are mostly state capitalists (not even of the Krugman/Bhagwati/Delong style). What's going on?

    ReplyDelete
  36. Keynesian fallacy that consumption spending drives employment,

    That is a laughable falsehood. You can't even get the Keynesian position right.

    No, it is not a falsehood. See below.

    Keynesianism doesn't say that "consumption spending drives employment".

    It says that effective demand/aggregate demand drives employment and output.

    No, that's what Keynes' followers held after Keynes was refuted on his original argument regarding "the marginal propensity to consume" necessarily limiting the creation of employment.

    aggregate demand = C + I + G + (E-M)

    Notice that "I"? Also the G and (E-M)?

    Notice that this is not what Keynes argued as the fundamental driver of employment?

    Notice how if all the money that exists in the economy is spent on G, or (X-M), or C, then exactly zero money will be available to pay wages and thus employment? Notice how only if I is positive, and not just I, but the wages in I (the other being capital goods in I) specifically, that employment of wage earners is possible? Notice how if money is spent on anything other than wages, then employment is impossible?

    Don't expect to be taken seriously until you show basic familiarity with Keynesian theory.

    The shoe is on the other foot you idiot. It is precisely you who is not at all familiar with Keynes's actual arguments.

    You're talking about New and Post Keynesian garbage, which has its own fallacies, as shown above, because it relies on the same Keynesian worldview of "spending."

    "I did not claim that wealth generation is "automatic."

    Game over. You lose.

    Hahahaha, you wish. You already lost a long time ago. This has just been an education of you since then.

    "Say's Law is, to repeat, just a refutation of the fallacy that there can be a general overproduction of wealth."

    That is not an argument that either explicitly or implicitly claims that wealth generation is automatic. It just argues that general overproduction of wealth is not possible.

    ReplyDelete
  37. According to whom? Some ignorant clod like you?

    No, to Say you stupid idiot. That's what Say showed. And if I am ignorant, then considering how devastating my criticisms have been for your incredibly moronic worldview, then you must be dumber than a bag of hammers.

    I'll look to the writings of J. B. Say himself to tell me what Say's law is about, thanks:

    (Say 1816)

    (Say 1832)

    Neither of these statements contradict Say's argument that general overproduction is impossible. This is a separate argument that in a monetary economy, goods and services are ultimately exchanged for other goods and services, using money as a medium of exchange. This is true.

    Say's Law is most aptly described by BM Anderson:

    "The central theoretical issue involved in the problem of postwar economic adjustment, and in the problem o£ full employment in the postwar period, is the issue between the equilibrium doctrine and the purchasing power doctrine.

    "Those who advocate vast governmental expenditures and deficit financing after the war as the only means of getting full employment, separate production and purchasing power sharply. Purchasing power must be kept above production if
    production is to expand, in their view. If purchasing power falls off, production will fall off.

    "The prevailing view among economists, on the other hand, has long been that purchasing power grows out of production. The great producing countries are the great consuming countries. The twentieth-century world consumes vastly more than the eighteenth-century world because it produces vastly more. Supply of wheat gives rise to demand for automobiles, silks, shoes, cotton goods, and other things that the wheat producer wants. Supply of shoes gives rise to demand for wheat, for silks, for automobiles, and for other things that the shoe producer wants.

    "Supply and demand in the aggregate are thus not merely equal, but they are identical, since every commodity may be looked upon either as supply of its own kind or as demand for other things. But this doctrine is subject to the great qualification that the proportions must be right; that there must be equilibrium." (Economics and the Public Welfare, p. 390).

    ReplyDelete
  38. And also to the recognised experts on Say's law, like Baumol and Sowell:

    "(1) The total factor payments received for producing a given volume (or value) of output are necessarily sufficient to purchase that volume (or value) of output [an idea in James Mill].

    (2) There is no loss of purchasing power anywhere in the economy. People save only to the extent of their desire to invest and do not hold money beyond their transactions need during the current period [James Mill and Adam Smith].

    (3) Investment is only an internal transfer, not a net reduction, of aggregate demand. The same amount that could have been spent by the thrifty consumer will be spent by the capitalists and/or the workers in the investment goods sector [John Stuart Mill].

    (4) In real terms, supply equals demand ex ante [= “before the event”], since each individual produces only because of, and to the extent of, his demand for other goods. (Sometimes this doctrine was supported by demonstrating that supply equals demand ex post.) [James Mill.]

    (5) A higher rate of savings will cause a higher rate of subsequent growth in aggregate output [James Mill and Adam Smith].

    (6) Disequilibrium in the economy can exist only because the internal proportions of output differ from consumer’s preferred mix—not because output is excessive in the aggregate" [Say, Ricardo, Torrens, James Mill] (Sowell 1994: 39–41).

    And? Number (6) is actually the heart of Say's Law, which is correct, which was not at all criticized by the sources you mentioned.

    ReplyDelete
  39. "Any "fluctuation" in investment that takes place on the free market would immediately generate market forces that reverses any fluctuation that is too far in any one direction."

    Unless you banish subjective expectations by facing a world of certainty there is no theoretical reason why investment would not be subject to fluctuation in a Rothbardian anarcho-capitalist system.

    Straw man. I didn't say there would be NO fluctuations in a free market. I said that the free market will tend to reverse any fluctuations that go too far in any one direction. If there is too much underinvestment in a particular area of the economy, or too much overinvestment in a particular area of the economy, then that will put into motion market forces that reverse them. Too little investment, or too much investment, will affect the rates of profit in those areas, and with too little investment, the rates of profit will be very high, and with too much investment, profits will be very low or negative. That will provide market participants with signals to CHANGE their investment patterns so that they invest more in the highly profitable areas and invest less in the unprofitable areas.

    There can be no such thing as a general refusal to consume more wealth. The desire for additional wealth is practically infinite. The problem is exactly when there is a discrepancy in the consumer's preferred mix of goods, not goods in general. You ask any individual if they would like to buy more wealth for their money, given the money they do spend, and they will all tell you yes. Nobody will say "I am glad that my money can't buy more wealth."

    ReplyDelete
  40. "To believe that violence, because it is "certain," can improve the lives of people who would otherwise be free and whose economic outcomes are not as certain as they would if they were robbed, or given free wealth, is no justification for looting."

    You retreat to your moral arguments.

    Not only are moral arguments NOT a "retreat", they are actually superior to economic arguments, since the sphere of morality is greater than the economics sphere, but you yourself CONSTANTLY refer to moral arguments. You are making value judgments all the time. Your morality is that some humans should be sacrificed so that other humans don't starve, go unemployed, or go homeless. Now you're saying I am "retreating" by responding to that moral argument with moral arguments of my own? You're an intellectually dishonest snake who can't stay consistent in his own bullshit.

    ReplyDelete
  41. Your naturla righst ethics or Hoppe's argumentation ethic is invalid and unconvincing.

    You haven't shown how my moral framework is invalid, and whether or not it is "convincing" to you is irrelevant to whether or not it is rational. In fact, considering how irrational you are, any moral framework that you reject is most likely a rational, sound moral framework.

    After all, you condone violence against innocent people.

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  42. Moroever, it has alreay been shown to you that the vast majority of people do not regard taxes as theft.

    You have not at all shown this, and even if it were true, that doesn't prove that taxation is not theft. If most people consented to sex from some dictator, even though the dictator advanced sexually on everyone, that doesn't mean that his actions are voluntary and not rape.

    You are AGAIN invoking the ad populum fallacy to justify your flawed ethical worldview. If 100 men voted and "agreed" to rape a woman, then just because 100 out of 101 people think it's justified, that doesn't mean it is justified.

    It doesn't matter if 6.5 billion people minus one believed that taxation is not theft. Theft is manifested at the individual level, not the group level.

    As long as ANY individual does not consent to taxation, and does not violate anyone else's property rights, then coercing him into paying taxes IS theft.

    At any rate, if you want to talk numbers, then it must be the case that most, or a substantial number of people do not consent to taxes and thus taxes are theft, or else the government would not have to use threats of violence to collect them. They could collect enough through voluntary donations at the individual level, like campaign contributions. But they do use threats of violence, precisely because enough people won't consent to it if it was voluntary and not theft.

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  43. They don't regard it as theft or violent coercion.

    Why are "they" the deciders of what is theft and not theft? By what right did the mob acquire the authority to decide when an individual is getting robbed and when he isn't, and every other moral act?

    Why do you keep appealing to the fallacy ad populum? If most people thought that slavery was justified, would it be justified? No, of course it wouldn't.

    Your flawed ethical worldview is preventing you from finding a firm foundation for justifying moral claims, so you are compelled to make contradictory claims where some times you say what the majority wants goes, and other times you say no, it's not the majority, but "what a rational and sound person would conclude" which of course is just a euphemism for "what I subjectively believe because I say so."

    So you then list a few (flawed) ethical systems from various political philosophers, which contradict each other, and then you say "Ignore anarchism, pick one of these statist ethics, and then leave me alone."

    You fail to justify your ethics using rational arguments.

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  44. "You'd only be fallaciously presuming that people are better off when they are victimized by violence with certainty, compared to facing an uncertain future on their own responsibility."

    Why don't you ask people whether they feel that the universal health care systems they enjoy, the social security benefits that allow to to SURVIVE when they unemployed or sick, and the law and order provided by the state that protects them and their famalies is just some horrible "victimization by violence".

    I do, and I have. Those who do not consent to it do in fact reject it. It's why over 26 states in the US are currently in the process of suing the Obama administration over Obamacare you stupid idiot.

    And again, EVEN IF the majority of people did want it, that doesn't justify imposing it on the minority of people who DON'T want it.

    LOL!! You keep claiming that as long "enough people want it" then it's ipso facto justified!

    So if the majority of people wanted to bring back slavery, then it would be justified too!

    Oh what's that? You lied about the majority being the source for what's justified? You now backtrack and claim there is an escape clause for you when it comes to the majority, but not me? I have to listen to the majority when you agree with it, but you don't have to listen to the majority when you disagree with it?

    You're a hypocritical sophist.

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  45. You ravings have no relation to the real world.

    Yes, they do have relation to the real world. All those individuals who do not consent should not be forced into it you tin pot dictator wannabe. YOUR ravings of appealing to the majority and your own subjective whims have no relation to sound, rational justifications for ethical behavior.

    Take tax as just one example:

    “The IRS Oversight Board conducted an independent poll in 2005 that found 96 percent of the respondents agreed ‘it is every American’s civic duty to pay their fair share of taxes.’

    In other words, the IRS reports (which means the real number is probably higher) that 4% of the population are being robbed according to that survey, which makes THE ENTIRE SYSTEM unjustified.

    As long as ONE INDIVIDUAL does not consent to it, then it cannot be justified.

    If everyone in the world wanted you dead, then that does not imply that they have the right to kill you. If everyone but 4% thought taxes are justified, then that does not imply that the 96%, through government, has the right to impose its will on the remaining 4%.

    An individual has the right to his own life, not the mob's whims.

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  46. The Pew Research Center in a similar study in 2006 found 79 percent of the respondents said that cheating Uncle Sam was ‘morally objectionable.’ (Maxwell 2000: 146).

    Which means the Pew Research Center reports that 21% of the population agrees that avoiding taxes is morally justified.

    Since there is a disagreement, then the party that has final authority over the disposition of a property is the private owner of that property. If there is disagreement about whether or not a given sum of money should be paid to the state, then the final authority is the consent of the individual owner of that sum of money, not the state, not you, not the majority. The property owner.

    You have a flawed, tribalistic conception of property rights, where the individuals in the state, or the collective, or the majority, "really" owns everything, and has final say, and the individual is just a means, a steward, a placeholder for controlling the wealth "for society." You are a fascist. You adhere to the EXACT same philosophy as fascism. You reject the notion that the individual is the final authority over their own property. You hold that "society", namely government and/or the political mob that supports it, should retain final control over all property that "private citizens" "own", for the benefit of the state and those the state gives the money to.

    Get it? Paying taxes is widely considered THE moral thing to do.

    Ad populum fallacy. That the majority believe anything is not at all a rational justification for any argument, ethical pronouncement, or claim.

    The INDIVIDUAL has the right to their own life free of violence you asshole.

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  47. It's ethical justification is EASILY provided by any number of ethical theories - Rawl's human rights ethics, utilitarianism, Kantian ethics, etc

    And there it is again. The reference to a list of philosophers who advanced mutually exclusive ethical theories, which I have to pick from anyway, as if you decide which list is approved and not approved, while you ignore the rationalist ethics provided by philosophers who base their ethics on the individual, not the group.

    No thanks. I'll stick with ethical theories that don't condone violence against innocent individuals just because "others" wish it.

    "And even if there were starving people or homeless people, a statist system cannot stop it, because states do not produce wealth."

    Of course a system of social security stops starvation and homelessness.

    Of course it doesn't. There are homeless people in the US, and there is social security in the US. Even if social security did stop homelessness, that doesn't justify it. It is not justified to initiate violence against innocent people so that others can live in a home for free.

    If you want to help poor people, then pay money out of your own pocket, or solicit for voluntary donations, and don't advocate that guns be pointed at innocent people to get them to pay. Let the individual decide how important it is for themselves to give to charity. If they want or need or desire or prefer all the money they can earn themselves, such that they retain control over where and to who they give their money, then that is their right as an individual. It's their values!

    You want to APPEAR as all moral and righteous, but you're not. He who calls for guns to be used to rob from people in order to give to others, is not moral or righteous. They are cowardly immoral cretins. You are a cowardly immoral cretin.

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  48. In societies that are currently very poor there may well be issues of scarcity - which any free market system also face.

    You moron. They are poor because they don't have, or have not had long enough, a semblance of a free market.

    And scarcity isn't an absolute concept, it is a relative concept, namely, relative to the individual's desires in the face of what's available. That there is little food or water or shelter in one area of the world, whereas there is more food and more water in other area of the world, does not mean that scarcity is higher in the first place relative to the second place. Scarcity means that the supply of wealth is less than the desire for additional wealth. In other words, scarcity is ubiquitous all over the world, no matter how wealthy people get.

    Humans act and have reason, which means their desire for additional wealth is practically infinite.

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  49. That is totally different question to the issue of social security systems in most modern Western or industrialised countries. There is no reason why anyone needs to starve or be homeless in societies where basic commodities are relatively abundant.

    Yes, it's "totally different" precisely because the very shit you're advocating here, isn't fully imposed here, whereas it is fully imposed elsewhere where there is less wealth being produced.

    "If people hold more cash by reducing their investment expenditures (since holding cash enables more consumption in the future than in the present), then this means time preference has risen, which means people desire more consumption in the present relative to consumption in the future (investment today)".... etc

    The issue was that continued deflation gives people have a guaranteed return to by KEEPING money idle. They do not need to risk their money on capital goods investment even if profit opportunities rise, since they have a guaranteed return by keeping it a warehouse and NOT lending it.

    Just because people can buy more goods in the future on the basis of falling prices in the future, does not mean that people hold out in buying goods indefinitely, nor does it mean that they will reduce their investments relative to their consumption.

    You are conflating a rise in cash balances with a rise in time preference. That doesn't follow.

    If people increase their cash balances, but leave their investment and consumption ratio unchanged, then productivity will be unchanged because the rate of production relative to consumption will be unchanged. That which is used in consumption will be replaced with more production. Just because less money is being used to facilitate the trade of real goods and labor, does not mean that less real goods and labor are being offered.

    You, like so many other Keynesians, have no clue when it comes to a monetary, division of labor economy. You conflate money as being a capital good in itself. If less money is spent, then allegedly there are fewer capital goods being spent. That does not follow at all you idiot. More money and spending just raises the prices of existing capital goods and labor. It does not increase the supply of these things. Only saving and investing can increase the amount of capital goods and employment.

    If there is less spending in the aggregate, then it would be exactly analogous to an economy with full employment and full utilization of resources, but everyone is just holding more cash for hoarding, instead of less cash for hoarding.

    For example, if the total quantity of money in the economy is 1000 units of money, where 1000 units represents however many trillions of US dollars, then if full employment and full utilization of resources is had with that 1000 units of money, then adding 1000 more units of money that people will hoard and not use for spending, and they still use the remaining 1000 units of money for investing and consuming, then the higher hoarding portion of their cash balances will not lead to any reduction in employment, investment, consumption, or any other type of spending. It's still 1000 units being spent.

    Well, if an additional hoarding of 1000 units of money to an economy that already has full employment and full utilization of resources on the basis of a gradually rising and then plateauing 1000 units of money, with isolated unemployment and idle resources along the way, since that isn't going to generate unemployment, then so too would it be the case that an economy starting with 2000 units of money in spending and investment, isn't going to have perpetual unemployment if spending on consumption and investment is gradually reduced to 1000 units of money, such that 1000 units are held as cash.

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  50. "Deflation meaning gradually falling prices due to increased productivity doesn't mean that producers and productive debtors are "penalized."

    Yes it is. If you pay back loans in money of higher value later (when it can purchase more), you are experiencing a "tax", transferring extra money to your bank or creditors.

    Then by that logic, inflation penalizes creditors, who are paid back in money that is worth less than what they lent.

    But of course, I don't hold that deflation penalizes debtors, because you agreed to lend the money at the interest rate implied. If you expect prices to fall in the future, then you can demand a lower interest rate.

    Inflation actually penalizes creditors, who are paid back in money that is worth LESS than what they lent, because they did not contract with the central bank to devalue their money. They were forced into the statist monetary system. Even if the creditor demands a higher interest rate to compensate for the rise in prices, then the loss of inflation is then transferred to the debtors who pay higher interest rates.

    ReplyDelete
  51. >"It says that effective demand/aggregate
    > demand drives employment and output.

    No, that's what Keynes' followers held after Keynes was refuted on his original argument regarding "the marginal propensity to consume" necessarily limiting the creation of employment."


    You are either (1) an ignoramus of the highest order or (2) a lair.

    Effective demand in terms familiar to what I have just said above is dealt with in Chapter 3 of the General Theory, "The Principle of Effective Demand".

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  52. "inflation penalizes creditors, who are paid back in money that is worth less than what they lent."

    Correct. Complete price stability is chimera that will never happen.

    Steady but low inflation is a superior outcome to steady or contiuous deflation.

    (1) we avoid debt deflationary effects
    (2) producers of actual wealth (those who engage in production of goods and services and employment of people) who require debt to finance production decisions are rewarded for production of more output.
    (3) a tax on creditors is superior to a tax on producers.
    (4) low inflation incentivises investment since you get no guaranteed reward for holding money idle, as in continuous deflation.

    ReplyDelete
  53. "It is not justified to initiate violence against innocent people so that others can live in a home for free."

    Ah, the "morality" of natural rights theory.

    The essense of your theory is: we would allow the earth to be destroyed by an asteriod because we think it is evil for government to violent our mythical absolute right to property.

    There is no absolute right to property. All arguments offered in support of the supposed right are wanting.

    Hoppe's argumentation ethic doesn't even overcome the is-ought problem.

    Just because you require the use of certain body parts in debate, it does not follow that you have any absolute moral right to the use of them or of external property.

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  54. This is like saying that because fish require immersion in water to survive and grow, therefore all fish have an absolute moral right to immersion in water, and that ANY violation of that right by humans is immoral.

    You violent fish aggressor, you!!!

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  55. "They are cowardly immoral cretins. You are a cowardly immoral cretin. "

    The extinction of the human species in scenarios where govenrment intervention would be required to save it follows logically from your natural rights ethics.

    Be careful throwing around these terms, the only people guilty of views practically indisguishable from the ravings of a lunatic are propertarian natural rights theorists.

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  56. Lord Keynes,

    Thanks for the book suggestions. I'm glad to see that you recommend Keynes: The Return of the Master since I'm currently reading that one and am about half way done. I'll check out Davidson's next.

    ReplyDelete
  57. Major Freedom is either a) a Poe b) an extreme caricature of libertarianism.

    Things don't look good. =/

    ReplyDelete
  58. "It says that effective demand/aggregate demand drives employment and output.

    No, that's what Keynes' followers held after Keynes was refuted on his original argument regarding "the marginal propensity to consume" necessarily limiting the creation of employment."

    You are either (1) an ignoramus of the highest order or (2) a lair.

    You are DEFINITELY an ignoramus of highest order. Not sure if you are a noun characterizing a home or domain.

    Effective demand in terms familiar to what I have just said above is dealt with in Chapter 3 of the General Theory, "The Principle of Effective Demand".

    The chapter called "principle of effective demand" doesn't even contain the principle of effective demand.

    Keynes writes:

    "The value of D at the point of the aggregate demand function, where it is intersected by the aggregate supply function, will be called the effective demand."

    But as D has been defined as "the proceeds which entrepreneurs expect to receive," then obviously this should be called only "the expected effective demand." If it is merely expected, it can hardly be
    called "effective."

    Rational economists who do not have holes in their heads do not need the adjective "effective" in front of "demand." Demand is effective by definition. If it is not effective, it is not called demand but need, want, desire, etc. The word "demand" implies the requisite desire along with the requisite purchasing power.

    Immediately after the equation and the definition above, Keynes states:

    "This is the substance of the General Theory of Employment"

    And on the baseless foundation of this worldview are all his absurd doctrines built!

    The invalid equation that relates actual costs to expected receipts, instead of actual receipts, is what underlies Keynes fallacious "refutation" of Say's Law.

    Keynes continues:

    "The classical theory assumes that the aggregate demand price (or proceeds) always accommodates itself to the aggregate supply price...Thus Say's law, that the aggregate demand price of output as a whole is equal to its aggregate supply price for all volumes of output, is equivalent to the proposition that there is no obstacle to full employment." - pg 26.

    This nonsense is a clusterfuck of fail. Not only does it distort what the classical economists argued, but it also completely mistates the substance of Say's Law.

    The classicals did not assume that demand price (aggregate or otherwise) "always" accommodates the (aggregate) supply price.

    Neo-classical economics only holds that under conditions of equilibrium, this and that follows. It does not claim that conditions will necessarily be in equilibrium. It does claim that under free markets, with flexible and fluid prices and wages, there will always be a tendency toward equilibrium.

    Say's Law does not claim, explicitly or implicitly, that "there is no obstacle to full employment." It does claim that the only obstacle to full employment is lack of equilibrium somewhere in the economy.

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  59. My argument that Keynes argued that it is consumption spending, not "effective demand", that ultimately drives employment and production, is verified by reading these passages from Keynes:

    "The outline of our theory can be expressed as follows. When employment increases, aggregate real income is increased. The psychology of the community is such that when aggregate real income is increased aggregate consumption is increased, but not by so much as income [meaning people tend to abstain from making consumption expenditures, and instead save and make investment expenditures, or accumulate cash balances]. Hence employers would make a loss if the whole of the increased employment were to be devoted to satisfying the increased
    demand for immediate consumption."

    Then he writes:

    "Thus, to justify any given amount of employment there must be an amount of current investment sufficient to absorb the excess of total output over what the community chooses to consume when employment is at the given level. For unless there is this amount of investment, the receipts of the entrepreneurs will be less than is required to induce them to offer the given amount of employment. It follows, therefore, that, given what we shall call the community's propensity to consume, the equilibrium level of employment, i.e. the level at which there is no inducement to employers as a whole either to expand or to contract employment, will depend on the amount of current investment. The amount of current investment will depend, in turn, on what we shall call the inducement to invest; and the inducement to invest will be found to depend on the relation between the schedule of the marginal efficiency of capital and the complex of rates of interest on loans of various maturities and risks."

    Now, when Keynes writes that investment will depend on "the marginal efficiency of capital" it is his fallacious belief that the marginal efficiency capital has anything at all to do with the money rate of return on capital, and when he refers to "the complex of rates of interest" it is his fallacious belief that in the depths of a depression, interest will drop even further as more net investment is made, instead of the truth, which is that more net investment increases the rates of profit, because net investment generates sales revenues but less than equivalent costs on account of depreciation. More revenues combined with less than equal costs will of course generate higher profits, not lower profits.

    If the people, as they grow wealthier, spend the same proportion of their incomes on consumption, then of course consumption will not increase by the same absolute amount as income. The difference will presumably be made up by the same proportional increase in investment.

    If on the other hand the people, as they grow wealthier, spend a smaller proportion of their incomes on consumption, then of course they must spend a larger proportion on investment.

    But Keynes never tells us which, or what, he means.

    (cont'd)

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  60. He then claims:

    "Thus, to justify any given amount of employment there must be an amount of current investment sufficient to absorb the excess of total output over what the community chooses to consume when employment is at the given level."

    Here is a tautology masquerading as an enlightening discovery. Of COURSE if we divide all spending into consumption and investment, then of course there must be sufficient investment to make up the difference between consumption spending and total spending, if we are to have full employment. But this can be applied to anything. If we divide total spending up into "pizza spending" and "everything but pizza spending", then full employment would depend on spending on pizza. If we divide total spending up into "hookers and cocaine" and "everything but hookers and cocaine" then full employment would depend on hookers and cocaine.

    Or, to use Keynes' stupid terminology, we can say "to justify any given amount of employment there must be an amount of pizza consumed sufficient to absorb the excess of total output over what the community chooses to spend on everything else but pizza when employment is at the given level."

    (cont'd)

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  61. With this stupid starting point, Keynes then writes the heart of his whole rotten system:

    "Given the propensity to consume, and the
    rate of new investment, there will be only one level of employment consistent with equilibrium".

    The independent clause in this sentence would be completely true, especially without the dependent phrases. There is only one level of employment consistent with full equilibrium, and that is full employment. This is true by definition! If there is unemployment, there must be disequilibrium somewhere. Duh.

    Keynes then writes:

    "The effective demand associated with full employment is a special case, only realized when the propensity to consume and the inducement to invest stand in a particular relationship to one another."

    This is nonsense. With equilibrium there is ALWAYS full employment. It would be like saying "full employment is a special case, only realized when there is full equilibrium, which in turn is only realized when consumption and investment are together sufficient to provide full employment." or "a week is a special case, only realized when it contains just seven days, no more and no less, in succession." or "economic growth is a special case, only realized when there is more production than consumption."

    Equilibrium exists only when the conditions of equilibrium are fulfilled, and one of those conditions is full employment.

    When Keynes then speaks of "equilibrium" with underemployment, he is talking nonsense. He is not really speaking of a position of equilibrium at all, but of something quite different. He is speaking of a static situation, a frozen disequilibrium, a situation in which some price, interest rate, or wage-rate, or many prices, interest rates, and wage-rates, are prevented, either by contract, labor-union resistance, or government intervention, from adjusting to an equilibrium level.

    (cont'd)

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  62. All this is not to claim, as Keynesians constantly straw man the Austrian economists into claiming, that unemployment or disequilibrium is impossible, or even that full employment or full equilibrium is the usual state o£ affairs.

    On the contrary, Austrians economists have always known that completely full employment or perfect equilibrium is never a fact, any more than perfection in any human affair.

    The concept of equilibrium, or in Mises' terms, "evenly rotating economy," is a mental tool of thought only. Just because equilibrium is never reached, that doesn't mean the tool is not useful, any more than mechanical engineers assuming a 100% friction free environment is not a valuable tool of thought to deal with the real world where machines and tools DO have less than perfect frictionlessness.

    Keynes's fallacies concerning equilibrium is due to his usage of the term "equilibrium" in two different meanings, one of which is totally bogus, namely, his claiming that a FROZEN state of affairs, say prolonged wage adjustments, is an "equilibrium."

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  63. Then Keynes writes:

    "For there would obviously be a natural tendency towards the optimum employment of resources in a Society which was functioning after the manner of the classical postulates. It may well be that the classical theory represents the way in which we should like our Economy to behave. But to assume that it actually does is to assume our difficulties away."

    This nonsense conclusively shows that Keynes had no clue what the classical arguments were, nor how to connect theory to real world data.

    It is because the labor unions and the politicians intervened to prevent the self-adjustments that would otherwise have taken place in the economy that prolonged mass unemployment and underemployment of resources occurred. Keynes blamed the "classical postulates" for the very problems
    caused by Keynesian postulates! For the postulates of Keynes were long being practiced by governments prior to Keynes even writing the General Theory, and so they were already causing the mass unemployment and under-utilization of resources that Keynes claimed was the fault of classical economics. These Keynesian dogmas were inflation policies, "price stabilization" policies, and inflexible wage rates in the downward direction.

    The price flexibility argued by the Austrians and neo-classicals as capable of solving partial disequilibrium, were prevented by Keynesian orthodoxy practiced by governments, and Austrians and neo-classicals got blamed for it.

    So much for the chapter misleadingly titled "principle of effective demand."

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  64. "inflation penalizes creditors, who are paid back in money that is worth less than what they lent."

    Correct. Complete price stability is chimera that will never happen.

    Red herring evasion. The argument you made was that a gold standard should not be practiced since it is deflationary. Deflation is allegedly bad because it penalizes debtors.

    Well, if a gold standard should not be practiced, on account of penalizing debtors, then fiat money standard should also not be practiced, on account of creditors being penalized.

    To respond to this with "correct, price instability is a chimera" is proof positive of a muddled mind that cannot make heads or tails of what it is trying to comprehend.

    I never made the argument that "price stability" is possible in a free market, or in any other economic system for that matter. Searching for price stability is a chimera, which is one reason why Keynesian economics is a chimera chaser. After all, Keynesians advocate for inflation and government deficits in order to influence spending and hence prices so that "deflation" does not set in. Now you're admitting that price stability is a chimera, which totally undercuts your entire nonsensical worldview! That is fucking hilarious.

    It would be like me capitulating and claiming that individual economic freedom is a chimera, so let's all join in with advocating for violence against innocent people because if we can't stop it 100%, then we should seek to exacerbate it.

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  65. Steady but low inflation is a superior outcome to steady or contiuous deflation.

    False. It's neither.

    Steady monetary freedom generates a superior outcome to steady inflation or deflation from a monopoly monetary authority.

    And what, pray tell, are your reasons for why inflation is superior to deflation? You write:

    (1) we avoid debt deflationary effects

    False. Gradual price deflation brought about by steady increase in productivity, in a monetary system where the total quantity of money and spending gradually rises over time as more commodity is mined and put into circulation, is not a cause for "debt deflationary effects." It is CREDIT EXPANSION BACKED BY NOTHING that sets the stage for a debt deflation collapse.

    If all money claims were backed 100% by gold, then a default on debt DOES NOT decrease the quantity of money in the economy. Credit expansion out of thin air on the other hand, which is followed by depression and defaults, DOES decrease the quantity of money and spending, because in our economy, the credit takes on the character of money, and when that debt is defaulted on, it loses its character of money.

    With a 100% reserve gold standard on the other hand, this does not happen. All loans are backed by money claims, and all money claims are backed by gold. A default on a debt promise will not reduce the quantity of gold, and thus will not reduce the quantity of 100% backed money claims, and thus will not reduce the quantity of money and spending.

    If Mr. X loans Mr. Y 1000 oz of gold, then Mr. Y takes into possession 1000 oz of gold. The quantity of money has not increased. If Mr. Y defaults on the loan, then the quantity of money will NOT decrease. There is still the 1000 oz of gold, either in Mr. Y's possession, or in someone else's possession when Mr. Y spent the money.

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  66. (2) producers of actual wealth (those who engage in production of goods and services and employment of people) who require debt to finance production decisions are rewarded for production of more output.

    Credit expansion does not generate more employment, or more resources, or more consumer goods, or more capital goods. Credit expansion can only ever DIVERT existing labor and resources from where they otherwise would have gone had there been loans fully backed by real savings only.

    That credit expansion temporarily lowers the rate of interest on loans, which stimulates more borrowing, does not stimulate production. It only stimulates production of a certain kind, namely, production for more intensive capital projects that consumption patterns have not in fact made economical on account of there not being enough REAL savings to complete the projects.

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  67. (3) a tax on creditors is superior to a tax on producers.

    No, it is not. Neither is superior to the other. Taxing creditors is bad and taxing producers is bad.

    Inflation taxes producers no less than creditors, for it raises the prices of the goods they must pay, and their incomes may not have risen before that time, which means inflation affects them by higher prices and thus lower purchasing power.

    You are ignoring the fact that when it comes to inflation, not everyone receives the new money at the same time and the same rate. Some people receive the new money before others, and that generates a wealth transfer away from those who receive the new money later on (typically those on fixed incomes, like wage earners, pensioners, creditors, and widowers), to those who receive the new money first (typically those whose assets are sensitive to inflate, like equity holders, and those close to the money printing press, namely, the government, the military industrial congressional complex, and especially Wall Street, who are almost always the first receivers of new money from the Federal Reserve.

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  68. (4) low inflation incentivises investment since you get no guaranteed reward for holding money idle, as in continuous deflation.

    False. Inflation incentivizes ALL spending, investment and consumption, but only to a delimited extent.

    With an inflation rate of say 3%, then cash holding might be reduced by say 10% on time only. There is no continuous reduction in cash for holding with a constant rate of inflation. Only if inflation accelerates will there be a continuous decline in cash holding. With high enough inflation, the desire to hold cash will disappear, and the currency will collapse.

    When it comes to gradual deflation of prices, then you may see a one time RISE in cash holding, say a rise of 10%, but you won't see a continuous rise in cash holding, any more than you don't see a continuous fall in money holding when there is gradual inflation.

    After the increase in the demand for money tapers off, then the resulting money and spending that takes place will be able to buy up EVERYTHING that money can buy, provided the government lets prices and wage rates FALL towards the new equilibrium tendency.

    Just like prices and wages won't spiral out of control upwards with gradual inflation, so too will prices and wage rates not spiral out of control downwards with gradual deflation.

    You conflating, again and again and again and again and again and again, a rise in money and spending with a rise in prosperity. More money and spending does NOT increase prosperity. It only benefits some at the expense of others, and it can only redirect resources and labor. It cannot create resources and labor. More money and spending just raises prices. It does not increase people's standard of living in general. Money is a medium of exchange. It is not houses, cars, refrigerators, toasters, or computers. Money is a medium. To believe that more money leads to more wealth is like believing making more notches on a yardstick can make people run faster.

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  69. "It is not justified to initiate violence against innocent people so that others can live in a home for free."

    Ah, the "morality" of natural rights theory.

    Ah, the old "I can't refute you so I will just try to lump you into this neat little package called "natural rights theory" and say "nah nah nah nah, you're wrong."

    The essense of your theory is: we would allow the earth to be destroyed by an asteriod because we think it is evil for government to violent our mythical absolute right to property.

    The essence of your theory is: we would allow the government to destroy people's lives all the time because we think destroying some people's lives is justified in end of the world scenarios of human extinction.

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  70. There is no absolute right to property.

    Yes, there is. There is no absolute right to theft.

    All arguments offered in support of the supposed right are wanting.

    False. The arguments offered in support of the absolute right are rationally justified.

    All the arguments in favor of violence are wanting, which is why you can only list a hodge podge of ethical frameworks, some of which are mutually exclusive, and hope one of them sticks.

    Hoppe's argumentation ethic doesn't even overcome the is-ought problem.

    It doesn't have to. No ethical justifications overcome the is-ought problem.

    Classifying the rulings of the libertarian theory of property is a purely cognitive matter. It no more follows from the classification of the libertarian ethic as
    “fair” or “just” that one ought to act according to it, than it follows from the concept of validity or truth that one should always strive for it.

    Libertarians can, contrary to your flawed ethical worldview, claim that their ethic is rational and true. Whether or not you want to adhere to it is obviously not something that is objectively imposed by nature onto you, but you'd only be denying it like a creationist denies evolution.

    Just because you require the use of certain body parts in debate, it does not follow that you have any absolute moral right to the use of them or of external property.

    The human body is not separable when the context is human rights. Hoppe didn't make an ethic for lips and vocal chords and lungs, he made an ethic for humans, which includes all human body parts.

    This is like saying that because fish require immersion in water to survive and grow, therefore all fish have an absolute moral right to immersion in water, and that ANY violation of that right by humans is immoral.

    You violent fish aggressor, you!!!

    Let fish have their own ethic, and us humanist libertarians will worry about a human ethic.

    "They are cowardly immoral cretins. You are a cowardly immoral cretin."

    The extinction of the human species in scenarios where govenrment intervention would be required to save it follows logically from your natural rights ethics.

    The extinction of the human species in scenarios where anarcho-capitalism would be required to save it follows logically from YOUR ethical worldview.

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  71. Be careful throwing around these terms, the only people guilty of views practically indisguishable from the ravings of a lunatic are propertarian natural rights theorists.

    Those who advocate for violence against innocent people from cradle to grave, on the basis that they perceive an end of the world scenario where the only way the human race can go on is if people are harmed, maimed, robbed, killed, or whatever, is what is lunacy.

    I am my own person. To sacrifice me for the sake of the unborn is sick and vicious. It is exactly like the depraved ancient Egyptian culture of worshiping death, with the only difference being that instead of the dead being worshiped, people who have not yet been born are worshiped instead.

    And it is worship, for they do not exist. It does not matter to an individual that the human race goes extinct after they themselves die. If the human race goes extinct peacefully, then no human will ever have to suffer, because unborn humans don't feel anything.

    If you feel bad about the human race going extinct, then that's just your psychological hangup. It has nothing to do with the lives and well-being of other human beings.

    Your ethical worldview is so evil, that you are compelled to admit that your worldview will conclude that the murder of defenseless babies is justified, if it means saving a million people. You want sacrifice from people. That's all you want. You want others to be sacrificed for your own sick desires. You have no conception of individual rights and what it means to be free and to be free from violence. You want the individual to be merely a cog, a means to the end, of "society."

    I'll safely reject that philosophy as the most evil philosophy on Earth, and as THE philosophy responsible for every mass murder, torture, robbery, dismemberment, and every other evil ever perpetuated by any human.

    You are the epitome of the depraved altruist ideology that pervades society. It is clear that every negative aspect of human life, is held by you. You're like an all-star of evil. If it's bad, you're for it. How did you ever get to be as fucked up as you are?

    You're sick and twisted, but all is not lost. I also accept that minds can change, so no matter how evil your philosophy is, you can adopt superior values and principles.

    If you EVER think for one second that you are going to get me to question my libertarian philosophy and accept your bullshit, then you will be fighting a battle you cannot win. I know my ethics are superior to yours. I know this because my knowledge is far superior to yours and I know the fallacies inherent in your beliefs.

    You are the scum of the Earth, and yet you sit in your puddle of disgusting puke and shit as if it is a pedestal, all because you believe that calling for violence against innocent people, to benefit other people, is moral and just.

    No wonder you are desperately trying to reject rationalist ethics. It's the wall that prevents you from feeling good about yourself in calling for violence against innocent people! Now it all makes sense.

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  72. "(2) producers of actual wealth (those who engage in production of goods and services and employment of people) who require debt to finance production decisions are rewarded for production of more output.
    (3) a tax on creditors is superior to a tax on producers.
    (4) low inflation incentivises investment since you get no guaranteed reward for holding money idle, as in continuous deflation."

    (2) With even low inflation, the balance of closing stock of inventories in the balance sheet is overvalued under a First In First Out basis, which is the basis used for inventory valuations by many businesses. An overvalued inventories overstates the value of assets on the balance sheet and shows higher profits due to cost of goods sold being lower than cost of goods unsold.

    Under conditions of overproduction, we may see wasteful accumulation of inventories by certain businesses and investors rewarding such businesses purely because inflation has allowed their assets and profits to be overstated. The moment any slack in demand or a brief slump happens, those profits will come crashing down and there may even be a net loss on the balance sheet. Stock prices will fall, and these businesses will face huge cost of capital, making it worse for people who work there. My modest experience with investing in the stock market showed me such cases, such as Suzlon in India.

    Inflation, almost always, is a real short-term nuisance that makes life difficult for so many people. Overstated assets followed by huge write-offs is a bad situation towards which inflation (even at low levels) contributes.

    (3) A tax on creditors is a tax on producers, because the producers need the creditors. Capitalism is about cooperation as much as it is about competition, and creditor's and producer's interests are close together, not against each other. Besides, one has to be a producer to be a creditor - after all, financial institutions do hold fixed deposits of producers.

    I mean, banks used to issue 100-year debt in 1911, as Professor Selgin points out, and now, they don't, because wonks playing around with money supply and price levels makes them uncertain. Does it not hurt producers that they have to renew their loans now and it might not even get renewed?

    (4) People don't just have to worry about guaranteed rewards, since nothing is guaranteed. Only the most risk-averse person would always sit on cash, while managers of hedge funds and mutual funds have to keep finding good investments in all times - upturns or downturns.

    I don't think we are in that much disagreement; we don't want inflation and we don't want deflation.

    But this system of having a minimum level of inflation, below or above which it should not go - it doesn't make sense. VHSs used to cost $80 in the 1980s and DVDs now cost $19. Policymakers looking at this statistic might even interpret that as deflation and demand expansion. It would be terrifying if technological progress that reduces prices so much that 3% p.a. CPI inflation falling to 2% p.a. is seen by wonks as a sign of deflationary spiral to be corrected. And the kind of "low inflation" that brings it back to 3% p.a. is undesirable, for reasons mentioned above.

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  73. Those who advocate for violence against innocent people from cradle to grave, on the basis that they perceive an end of the world scenario where the only way the human race can go on is if people are harmed, maimed, robbed, killed, or whatever ...

    Pathetic caricature. But then that's your stable.

    No one said that the hypothetical scanario imagined required maiming or killing people - just an amount of coercion required for taxation for the minority who (unlike the majority) would oppose state intervention to save the planet.

    Behold the total moral bankrupcy of natural rights ethics:

    "... It does not matter to an individual that the human race goes extinct after they themselves die. If the human race goes extinct peacefully, then no human will ever have to suffer, because unborn humans don't feel anything.

    If you feel bad about the human race going extinct, then that's just your psychological hangup."

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  74. "Let fish have their own ethic, and us humanist libertarians will worry about a human ethic."

    Are we now to believe that you accept the same obviously flawed arguments that Hoppe hold but now applied to fish? More proof of the intellectual nonsense of natural rights.

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  75. LK, there are benefits and losses of letting people like this ah called Major_Freedom to comment in a blog. Being a follower of your blog, I think that the losses are overwhelming the benefits. You should ban him, you have the right to do it. There are enough Austrians, and much better than this one, to discuss with. No need to keep torturing ourselves. Cheers from another post-Keynesian.

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  76. Those who advocate for violence against innocent people from cradle to grave, on the basis that they perceive an end of the world scenario where the only way the human race can go on is if people are harmed, maimed, robbed, killed, or whatever ...

    Pathetic caricature. But then that's your stable.

    It's the same logic as the one you are using to justify taxation right now you hypocritical stooge.

    No one said that the hypothetical scanario imagined required maiming or killing people - just an amount of coercion required for taxation for the minority who (unlike the majority) would oppose state intervention to save the planet.

    But my hypothetical example is that anarcho-capitalism has to be practiced or else the human race will go extinct. If you are against anarcho-capitalism now, then the same logic you used against anarcho-capitalists can be used against you, and we can say to you that because you don't advocate for anarcho-capitalism now, it means your ethic leads to being willing to let the human race go extinct.

    Behold the total moral bankrupcy of natural rights ethics:

    You haven't shown how natural rights is flawed.

    You've only shown an inability to make a rational case for your ethics.

    "... It does not matter to an individual that the human race goes extinct after they themselves die. If the human race goes extinct peacefully, then no human will ever have to suffer, because unborn humans don't feel anything.

    If you feel bad about the human race going extinct, then that's just your psychological hangup."

    How is that "morally bankrupt"?

    "Let fish have their own ethic, and us humanist libertarians will worry about a human ethic."

    Are we now to believe that you accept the same obviously flawed arguments that Hoppe hold but now applied to fish?

    One, you haven't shown how Hoppe's ethics is flawed. Two, no, I do not accept a human ethic being applied to fish. That was your craziness.

    More proof of the intellectual nonsense of natural rights.

    You haven't shown how your question is itself proof of anything. Questions do not constitute proof.

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  77. "But my hypothetical example is that anarcho-capitalism has to be practiced or else the human race will go extinct"

    And what actual "hypothetical example" is that? Describe one. Not some vague assertion.

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  78. Prateek Sanjay,

    "People don't just have to worry about guaranteed rewards, since nothing is guaranteed"

    In an environment of continuous deflation of course you get a guaranteed return on money just by holding it idle.

    While I appreciate some of your comments above, I don't see how you deny this.

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  79. "But my hypothetical example is that anarcho-capitalism has to be practiced or else the human race will go extinct."

    And what actual "hypothetical example" is that? Describe one. Not some vague assertion.

    It doesn't matter. It's hypothetical.

    Suppose the human race finds itself at a point where technological progress and the ability to produce more resources is so precarious, so limited, so sensitive to violence, that the only conceivable solution to enabling the human race to survive is to stop all violence altogether, so that all individuals are maximally free to finds ways to produce more and earn more income.

    If there are any individuals who seek to impose a monopoly rule over others via a state, then those ruled will die, because they already need 100% of their incomes and full economic freedom to solve their problems. Any taxation or regulations stopping them will kill them. Resources are that short. People have to have 100% economic freedom or else they cannot mentally and physically work to provide enough resources for themselves or their families, because they need 100% of their incomes and 100% of their minds to figure out how to survive another day. If any state forms, people will die, because there just isn't enough resources to violently confiscate and redistribute to others. Everyone is at minimum subsistence. The more people who are ruled, the more people who will be killed. If a state goes through with it anyway, then they will kill those ruled, and production will drop even further, thus it will start to kill the individuals calling themselves a state as well.

    So in this hypothetical scenario, only anarcho-capitalism can save the human race.

    Since you argued that anarcho-capitalist ideology could potentially kill the human race in a hypothetical example, then I can argue that your statist ideology could potentially kill the human race in a hypothetical example as well.

    Prateek Sanjay,

    "People don't just have to worry about guaranteed rewards, since nothing is guaranteed"

    In an environment of continuous deflation of course you get a guaranteed return on money just by holding it idle.

    No, you DON'T get a guaranteed return on money just by holding it. Holding $10,000 for a year, while prices fall by 2%, is not return on your money of 2%. You didn't earn any money. Your purchasing power just increased.

    But because you can earn MORE money through investment, and because people need to consume eventually, it is not the case that gradual deflation will lead to a collapse in investment and production and employment. It might lead to a slightly higher cash balance, but it won't lead to ZERO consumption and investment expenditures. As long as consumption and investment expenditures remain positive, then this demand can buy up EVERYTHING that money can buy, if prices are able to be flexible and stop hampered by the government or government backed unions.

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  80. "Suppose the human race finds itself at a point where technological progress and the ability to produce more resources is so precarious, so limited, so sensitive to violence, that the only conceivable solution to enabling the human race to survive is to stop all violence altogether, so that all individuals are maximally free to finds ways to produce more and earn more income. etc. etc.

    Supposing that was the only solution (and that your hypothetical scenario is sound, which I doubt), then a consequentialist/utilitarian ethics would tell you that the moral action WOULD be to adopt an anarcho-capitalism system.

    So you have just reinforced the reasonableness of consequentialist/utilitarian ethics! Good work.

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  81. "It might lead to a slightly higher cash balance, but it won't lead to ZERO consumption and investment expenditures"

    Straw man. That's not what I argued.

    My statement:
    "There would be powerful disincentives to capital goods investment. By holding money idle, you have a guaranteed return."

    And you have already essentially conceded it, saying that "It might lead to a slightly higher cash balance ...".

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  82. "Suppose the human race finds itself at a point where technological progress and the ability to produce more resources is so precarious, so limited, so sensitive to violence, that the only conceivable solution to enabling the human race to survive is to stop all violence altogether, so that all individuals are maximally free to finds ways to produce more and earn more income. etc. etc.

    Supposing that was the only solution (and that your hypothetical scenario is sound, which I doubt), then a consequentialist/utilitarian ethics would tell you that the moral action WOULD be to adopt an anarcho-capitalism system.

    Whose utility?

    So you have just reinforced the reasonableness of consequentialist/utilitarian ethics! Good work.

    "Reasonable" according to what standard?

    "It might lead to a slightly higher cash balance, but it won't lead to ZERO consumption and investment expenditures"

    Straw man. That's not what I argued.

    Straw man. That's not what I claimed you argued. It was my argument. As long as there is money spending on investment and consumption, then that spending can buy up every capital good and labor and consumer good, provided prices are free to fall and not be stopped by coercive law.

    My statement:

    "There would be powerful disincentives to capital goods investment. By holding money idle, you have a guaranteed return."

    False. You are not guaranteed a return. Only if the purchasing power of money rises, which means only if production of real goods exceeds the increase in the supply of money, can you experience a rise in purchasing power. But if that is true, then production must be taking place, which means investment must be taking place.

    That the purchasing power of money will gradually rise over time as goods production exceeds money production, may lead to people holding higher cash balances, but it is not the case that they will only reduce their nominal expenditures for capital goods and labor in order to do it. They can also delay their nominal expenditures for consumer goods.

    Only if individual time preference have increased can you conclude that people will reduce their investment expenditures relative to their consumption expenditures, as they build up their cash balances. But when the purchasing power of money gradually rises, it does not follow that time preferences will change.

    Hence, holding time preference as unchanged, then a gradually increasing purchasing power will, at most, generate a one time delimited rise in the demand for money, which will come out of reducing both investment and consumption, leaving the proportion between the two unchanged, which means real production will not decline, because the rate of producing goods versus the rate of consuming goods will not be any different. Capital accumulation would take place at the same rate as before.

    There is no reason to believe that a gradually rising purchasing power of money will change people's time preference.

    If anything, a sounder money will INCREASE investment. Inflation reduces real investment and increases consumption, which shrinks economies.

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  83. And you have already essentially conceded it, saying that "It might lead to a slightly higher cash balance ...".

    No, to hold that gradually increasing purchasing power might lead to higher cash balances, does NOT mean that production and investment declines. It only means that instead of holding 1000 units of money and spending 500 units of money on capital and labor, and 500 units on consumption, say, there will instead be a holding of 1500 units of money and spending 250 units of money on capital goods and labor, and 250 units on consumption, say.

    The 250 spending on capital goods and labor, and the 250 spending on consumption, can buy up every capital good, laborer, and consumer good, provided prices can freely fall without being stopped by any coercive laws.

    You Keynesians keep fearing cash holding like it's the end of the world. It's actually so beneficial that it's not even funny. When people have higher cash balances, then they are better equipped to handle future shocks to their income. What's so bad about that? Whatever remaining money and spending that does take place, can accommodate all that is produced and sold.

    Investment is not disincentizived any more than consumption, which means the investment that does take place, would be enough to replace the resources used up in consumption.

    Hoarding cash is a positive, not a negative. The benefit goes to the individual cash hoarder at no loss to anyone else, because the only way any individual can increase their cash balance, is if someone else decreases theirs by choice.

    If some people are going to increase their cash balances, then it must be the case that others decrease theirs. Why do you want to go against what freely acting individuals want for themselves? Why do you insist on overruling free trade outcomes that benefit all those who take part in it?

    If you start to accumulate cash by making exchanges with others, then I am not harmed at all by it. Whatever money remains in circulation, including my own money, will just acquire a higher purchasing power. In fact, to the extent that we are in some sphere of economic competition, say we are both consumers, or both producers, or whatever, then you're abstaining from spending is actually a benefit to me, because by reducing your demand, I have a better chance at outbidding you for goods, since my demand is relatively higher.

    People who hoard cash are making your money more valuable.

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  84. By the way Marx had nothing to do with Stalinism, despite what Stalin might have said himself.

    BP

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  85. Anonymous @5:23 AM

    By the way Marx had nothing to do with Stalinism, despite what Stalin might have said himself.

    Stalin had everything to do with Marxism. Stalin was a textbook example of a proletariat dictatorship in Marx's Paris Manuscripts.

    The fact that Marx's mystical "materialist dialectic" failed to transform the dictorship into a stateless Utopia in the real world does not mean that the bloody mess that was Stalinism was not Marxist. It was. From top to bottom. All ten planks were fulfilled, and the evil that existed was in line with Marx's Paris Manuscripts.

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  86. The clue is in 'proletariat'. Besides dictatorship in that quote doesn't mean what you think it means.

    Lastly please provide the "materialist dialectic" quote from Marx. Not Engles, Lenin, Richard Pipes, Wikipedia, etc.

    BP

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