abskebabs

Bascule I think I agree with you that important lessons on what caused the crisis have not been learned, but entirely disagree with you on what those lessons were. Do you only pay attention to people who get it wrong(with "free market" economists who have never predicted anything accurately like Ben Bernanke)? Have you not listened or learned from anything of the findings, predictions and conclusions about US financial and fiscal health by analysts like Peter Schiff and Marc Faber, or economists like Robert Murphy and Mark Thornton? True, if you do regulate lending and other financial activities you will limit all kinds of investment, both good and bad; the Soviet Union never had to worry about business cycles. But you've entirely ignored the factor that caused the crisis; the credit expansion and low interest policies pursued by the Federal Reserve commbined with the moral hazard induced by Greenspan's put and Bernanke's Bailout policies. The current regime does not look like it is remedying the Bush administration's policies; only exacerbating them.

I think I can sympathise with where you're coming from. Philosophers have historically over-rated the power of pure deductive reasoning and elaborated on the absolute as if it was their pocket watch. This is the habit of Hegelian and Marxian dialectics, as well as the tactic commonly used by religious apologists. But are you saying that there is no such thing as apriori truth? Do subjects like logic and mathematics have NOTHING to do with reality, even though we already assume them in formulating and testing hypotheses in subjects like physics? Even though the subject matter is different and does necessarily incorporate the concept of causality(among more specific provisos in accordance with its subject matter), is it impossible for you to conceive economics relating to economic history in a similiar way? And despite your sarcasm, I recommend you give my "boy" Mises a good try! You already know where to look, there is a wealth of free literature available on the subject at mises.org.

Have you studied Human Action, or Man, Economy and State and seen for yourself and investigated the premises and logic used to derive these theorems of Economics? These are not hypothetical premises because they do not deal with concepts that are empirical in the sense of the natural sciences in the first place! Whether a trade is profitable, even the concepts of profit and loss are mental praxeological categories that necessarily exist and derive from the essence of human action. The same is true of the concepts of productivity, capital and time preference that is used to explain interest. Both you and mooeypoo are right in a certain sense because economic scenarios do not lend themselves to "experiments" whereby all variables can be controlled or even accounted for(a person's preferences can't be "measured", only demonstrated after the fact). The closest we've had to demonstrating the problems of Economic calculation in a socialsit commonwealth has been the comparison between East Germany and West Germany(or North Korea and South Korea), but this does not allow us to test these factors by induction as people can always pull out some excuse as a causative factor like "bad leaders." A natural science of Economics is impossible. What we have that is valid is a theoretical subject that has to be applied using one's understanding to historical and present day occurences to provide insight for future action and historical explanations. Each claim I made is made et ceteris paribus(all other things being equal), because there are always external factors that can affect economic changes, like price controls preventing a shift in supply in response to increased demand.

Nothing much. I did ask earlier however in what sense the term equality was used, to which it was later elaborated the poster meant "equality under the law." I can agree with this, if we want to take a minarchist line with things, by which we would include laws that are actually constitutional(for example, weak one I know) and don't encroach on the personal and commercial affairs of private individuals through binary or tertiary intervention, especially not that which attempts to enforce some false sense of equality in these spheres! But then again, I'm not a minarchist so I don't view the state as either a necessary or beneficial institution.

lol:D. Just for the record, I don't think the girl has to kiss everyone at the disco, I used the examples I used to show the arbitrariness and logical symmetry of what you seem to be in favour of, and the examples I gave. They're only ridiculous from your own subjective value judgements and prejudices, realise that. As for discrimination lawsuits, this practice would be discouraged in a free market anyway, without having to encroach upon the rights of employers. If I'm a racist that only wants white labour, then hiring less competent whites will not only increase the price of their labour on the market through my bidding for them, it will increase the profit margin for a rival entrepreneur who hires the subsequently cheaper black labour. This means employers that do indulge in arbitrary racism that doesn't help their bottom line, will either be outcompeted away, or have to be satisfied with a far more diminished market share than they would otherwise have had. That's their choice, it's the price they pay to indulge in bigotry. Also, it's still a decision he/her makes with his own private property and has not violated anybody else's person or property. By assuming some sort of equality law, you are appropriating yourself(or the state) as some sort of ultimately knowledgeable arbiter with regards to the productivity of each worker. How can you definitely "know" whether every decision not to hire a black person is out of racism or not? An interesting case related to this is with the end of slavery in America. Large amounts of blacks entered the labour market able to outcompete unionised white labourers and contractors. As the unions realised this as a fatal threat to their inflated position in the labour market, and once they realised that violence and intimidation would not be enough to get rid of their labour competition, they lobbied for minimium wage laws. The obviously paternalistic government granted them. Hence the black labourers lost their competitive advantage to the unionised white labour with regard to these kinds of jobs, and their social progress was stumped as to their acquirement of social and intellectual capital. History may have been completely different, without justifying state interference in the labour market had these interventions never been adopted in both the US and South Africa.

I'm curious, is this a right to equal treatment by the state or by other people? I think it is important to realise this is not a "rights issue" but a priveliges issue. We are arguing over ultimately the ratio of priveliges accorded to one group as opposed to another of the state's "loot." One can certainly make egalitarean arguments about it, but as there are no objective definitions with regard to the delineation of human affairs or personal relations, so the boundaries can be stretched arbitrarily as we are witnessing with this debate. Also, do we have a right to be treated equally? Is this consistent? If a girl chooses to kiss me at a disco, is she mandated to kiss everyone esle in order not to offend their right to equal treatment? Can a businessman not hire an employee for his own private pruposes without hiring all other applicants in order to avoid offending their equality? I see this as nonsense, because all human decisions are a demonstration of preference, not equality.

Let us agree to disagree, I used to share your point of view, and the debate on the subject is not for here. In any case, as I said earlier I'd recommend reading the following author: http://mises.org/journals/scholar/Hoppe.pdf

Not to get into the details, since this isn't the place, but I would say that these are not opinions. They seem to be conclusions drawn from economic models of some sort. I would expect you to be able to support each statement, and I would also want to feel free to question the reasonableness/pertinence of them, depending on the context of the discussion (e.g. the first statement; if nobody is suggesting such an increase, then it may be a red herring to discuss it). The statements which I made were not from complicated models, but simple economic propositions. They are like logical statements(hence they are more accurately described as praxeological), whose verification does not rest empirically, as they are built up as a description of mental concepts that are applied in trade and catallactic action. As far as they refer to reality they are not perfectly certain, one has to rely on one's understanding concerning the future and the conditions usually described under the statement "all other things being equal", to predict the consequences concerning how they relate to reality. As I've said in another thread, the character of this form of prediction is necessarily different to that found in the natural sciences. I'd say the first statement is not a complete red herring given the raising of the minimium wage in the time of an economic crisis when prices and wages should have been allowed to deflate in order to allow labour capital to be reallocated more productively. This would have allowed for a real recovery, like the one the US experienced in 1921, instead of the current attempts to reinflate the bubble that will produce another great depression... As an aside: I think once the Chinese start selling treasuries, that will be the straw that breaks the proverbial camel's neck.

You're right, my point is much more general but it is really to highlight the difference between a right and a privelige, 2 things that are unfortunately confused. I may have the right to engage in my own affairs with my own property or with other willing individuals. However it is not a right for me to demand and expect subsidization or enforce mandatory recognition using coercion via the legal apparatus from other individuals for my personal habits(like the NHS paying for sex change operations). I am perfectly entitled to a bizarre sexual relationship with my couch and call it my wife, but this does not mean I am entitled to state granted benefits or recognition from the rest of society. My main point is that even though people are hypocritical about the use of "public funds", like conservatives in America wanting to impose "Intelligent Design" through state funded education on the kids of parents who don't buy that crap; they reveal their true resistance to statist imposition and policy on personal affairs when it is disagreeable to them, e.g. recognising and having to give legal priveliges to gay marriages by law. My solution: Get the state out of the affairs of the people...PERIOD. If that means dismantling the state, so be it. I would recommend a reading of Hans Hoppe on private defense, for people here with uninformed views on anarchy.

I think part of the reasons gay marriage may be opposed, is as a consequence of the state and legal priveliges associated with marriage in general. Indeed, it is questionable as to why the state should have ANYTHING to do with a personal union between 2 individuals. So, self stlyled "conservatives" may have objections towards ultimately subsidizing or having to by mandate legally address something they disagree with. This objection only has any meaning however with the peculiar situation we face today whereby the State is the determinant of marital relations, and not some religious authority.

Interesting, I think I can sympathise with some of the motives behind your creation of this thread. I think a lot of threads on this forum have been little more than attack threads, e.g. against those who oppose socialised healthcare. Howver do you consider these statements "merely opinions"? 1. Increasing the minimium wage to $40 an hour will create unemployment, all other things being equal. 2. Inflating the money supply in circulation will produce price inflation or a lesser amount of price delflation further down the road, all other things being equal. 3. Increasing public debt to finance the welfare-warfare state will consume/destroy otherwise available financial capital(and possible future "real capital") that could have been allocated productively on the market. I look forward to your response, just so I know where we stand.

I've spent most of this thread trying to relay the difficulties inherent within the subject for this to be the method of its advancement, whether it be the necessarily subjective and already theoretical and logical aspect of its subject matter, or the trouble to do with the fact that alll its positive statements are made fully aware of the fact they are made assuming et ceteris paribus(all other things being equal, knowing these conditions do not exist in the real world. Another problem is the causal, not simultaneous influence of the interrelated data. One example is the statement et ceteris paribus, that increasing the money supply will produce price inflation or lower price deflation due to increased productivity. I've spoken with a friend from another forum about this, and I've realised I have misrepresented Mises' statements about Economic methodology with Rothbard's. For example Mises never spoke of an "action axiom", so what I'm trying to say is don't take me as authoritative in my attempt at an account here, I think I've made a few mistakes. I've tried to explain why the nature of prediction is an altogether different thing in Economics, but just for fun, how's this: Let's raise the minimium wage to $1k an hour and see if we don't increase unemployment and force economic activity underground.(assuming the federal reserve doesn't inflate EVEN crazier than already)

Ok, fair enough, would you be able to read the first few pages of Human Action, and the above paper, and tell me what you're impressions are then? I'm just curious if it is similiar to the kind of stuff you've read in Theology.

Hmm, yes I suppose Theology does make use of Logic, but I wouldn't compare it to Economics because even though it is aprioristic in a certain sense, it does not rest on synthetic a priori foundations of the Kantian form, whereby the fundamental statements are such that even an attempt at their denial relies on implying the existence of the original statement. The view that Mathematics and Logic are not sciences (but "tools of thought") is essentially the modern day view of science that has come from the influence of the school of Philosophy known as the "Logical Positivists" (Popper and Karnapp were prominent members I believe). Their foundational statement is that: 1. All statements are either analytical or hypothetical. Analytical statements are essentially defined tautologies, that do not have any relation to reality, but can be part of a self contained deductive truth. Hypothetical statements are statements of pure hypotheses that require "testing" for falsification, and cannot be proved right but can be ruled out. These are the only statements that can have any relation to the real world. According to this view there can be no a priori truths that can refer to reality. The problem lies with the foundational statement of this philosophy of science. Statement 1 can only be analytical or hypothetical by its own requirement. If it is analytical, then it is itself an anlytical statement that we cannot take to have any relation to the real world! If we consider it hypothetical then we must test as a hypothesis, whether all statements can be hypothetical or analytical only! Hopefully you realise how ridiculous this, and how empty a defnition of science it provides. I think you have a good point about complexity. It is extremely hard to separate cause and effect in Economic phenomena, the goal of historical research in this area is therefore to ascertain the inflouence of different factors already known from theoretical economics( e.g. what influence did the price restriction have, what extent was the role of moral hazard? etc). There may be a role for "experimental economics" in terms of discovering the extent of the influence of theoretically known factors, in certain scenarios, but it cannot replace economic theory, in much the same way that you can't use physics to test maths, it relies on it already to find the extent of normative factors within the physical universe. The atheoretical approach to Economic phenomena was exactly the approach of the German historical school and the American institutionalists. The problem is that as soon as one stops recording raw data, and attempt the use of statistics or regressions, you are already applying a priori assumptions and theory, only this time it is absolutely arbitrary. The root of the problem is that Economic phenomena are subjective, and what I mean by this is that the value that is placed on products is ultimately based on the subjective preferences of individual consumers. The prices of higher order goods and capital are dependent on the prices of products, as their price depends on the profit anticipations of entrepreneurs and speculators. Concepts like price and opportunity cost will never be "empirical" in the sense we define our terms in the natural sciences. You don't "test" them, just like you don't gather apples to find if 2+2=4. They are already implied in the act of exchange, whether interpersonal or autistic, and deductions based on these categories is sound, but the extent of the influence of the factors cannot be known beforehand in reality, and this does require historical research and interpretation. Entrepreneurs constantly use this knowledge combined with historical understanding to curb their actions to the expected prices of the future. Another problem for an alternative approach to Economics is the lack of constants, whereby all causative factors are variables. For example, if you "measure" the change in price by +5% after a 10% drop in supply one has not "measured" elasticity of demand but recorded a historical effect. Indeed supply and demand curves are problematic in this regard because they assume simultaneous determination of the price by the change in supply, when the actual influence is causal, and takes time to affect the change in price. These are just 2 other problems of the Mathematical approach to Economics. I think you guys are thinking this is saying a lot more than it actually is: In the Misesian scheme, it is acknowledged that the scope of Economics is far smaller and modest with regard to markets than is assumed in the rest of Economics. Quantitative predictions are explicitly recognised as impossible due to problems associated with knowledge of et ceteris paribus conditions. For a better attempt to explain some of the foundations of this approach to Economics, I'd recommend the following paper: http://mises.org/journals/scholar/long.pdf

Interesting, I'm glad this has merited discussion, and I must say I'm happy to finally be aware of the Other sciences section, I know where to place related threads in the future(please forgive me I can be a bit slow!). I must confess, if I was asked the question over 2 years ago, my answer probably would have been no. My views have been influenced by my readings, especially by the work of Ludwig Von Mises and other members of the Austrian School of Economics. I think, on balance, you may find that we actually have more agreement than necessarily meets the eye;). First we should be aware of our definitions. If you do not consider logic or mathematics as a science, then I think I could agree with the statement that Economics is not a science. However I would disagree with such a doctrine on the basis that we make use of these sciences at many points in our reasoning between results, theories and theorems that involve the natural sciences. To throw out the theoretical apparatus we continually employ as unscientific, I feel would be therefore unscientific, even what is referred to as employing inductive reasoning, often uses deductive reasoning to gain its conclusions, relying on the laws of logic and mathematics. Economics is the study of Human Action (known as Praxeology in Misesian circles), chiefly concerned with market phenomena in an industrial economy necessitated by the existence of private property and indirect exchange by the use of a medium of exchange. For the study of this at present imaginary construction, it does make use of others like Robinson-Crusoe and a world ncompassing Socialist commonwealth. I would say it meets the conditions of a theoretical science, when elaborated in the Misesian framework starting with the action axiom much like Mathematics and Logic. Additional understanding and anticipation of unknown and unknowable normative factors like values, volitions and hence where prices are tending is required however to make predictions; that are therefore not scientific in the natural scientific sense, but entrepreneurial. The action axiom states simply that human beings act purposefully, henceforth aiming at an end and applying a means with which to achieve it. To argue otherwise would be a self contradictory act, as it would employ a means to achieve the end of disproving the original assertion. This makes it meet the criterion of a Kantian a priori statement that may at first strike the reader as odd, as one may imagine that Kant was aiming to produce laws of thought and reasoning, hence trying to establish a repetition axiom as the basis of Mathematics(a feat later accomplished by Paul Lorenzen and other members of the Erlangen School). However the action axiom is more general, as thought itself is another form of action. The inter-relations between the 2 are discussed in more detail in the work of another Austrian school theorist; Hans Hermann Hoppe. One may object, like Friedrich Hayek, to the backing of the action axiom, when applied to , multiple individuals but oneself, for which one can show the truth is a priori. There are other counter-arguments, but a basic one would be that the uniformity of the logical structure of the human mind has always been a basic scientific assumption. These views were competently argued for by logicians like Gotlobb Frege and Wittgenstein, fighting the psychologism and polylogism prevalent in their times. Now starting from the action axiom, one can elaborate various notions that must follow from it, like action being necessarily an exchange phenomena, even for an isolated individual exchanging various alternative states of perceived future affairs, and hence requiring the category of ordinal preference between these. When we enlarge our discussion to interpersonal exchange the only thing that differs is that we must begin with the knowledge posessed by both actors as to how certain actions of either could benefit the other. From this, analysis of these categories one can begin to see how the notions of opportunity cost, and psychic profit ad loss are involved and associated with action, and these are completely different to monetary profit and loss. Misesian Economics does not rely on "purely rational"(a contrary use of the word rational, as action apart from nervous reflexes is by necessity rational and purposeful) actors aiming only at monetary profit like classical and much of neoclassical economics. Now, what I've mentioned so far does not change the characteristic that Economics can never be like a natural science, but what I have aimed to explain is that it attempts to theoretically and deductively the necessary categories implied in human action, especially market exchange to produce a body of necessary truths that must be fulfilled et ceteris paribus(all other things being equal), e.g. the law of demand or the Ricardian law of association. However, as the diligent ones among you have noticed, it is very difficult to ascertain the way factors are and to comb through the complex cause and effect relationships affecting the economy. What a study of Theoretical Economics can give you is an understanding, but not predictive power in the sense of the natural sciences. For those interested, you may want to look into the nature of Case probability(sometimes called Knightian uncertainty). Hence if the minimium wage is raised to $10k per day, we can be fairly sure there will be some unemployment due to our understanding of market phenomena based on analysis of the fundamental catgories underlying human action like exchange; but not be able to predict how much unemployment will result due to the knowledge problem associated with et ceteris paribus conditions. Indeed, even being fairly sure qualitatively is held to uncertainty, due to the fact we may not know of mitigating central bank monetary inflation or domestic cartels that strongly mitigate the effects of the legislation(Ok, I admit that probably wouldn't happen with a $10k minmium wage). Now the Austrians, never, argue and this is accurate in my view, that Economics could be like a natural science. However, it is a valid theoretical science informing us of the categories necessarily implied by the actions taken on the market given the conditions of our world, and the logical structure of the human mind. The closest we get to the kind of knowledge about actual normative factors that affected Economic exchange is through Economic History, that must analyse ex-post, using the apodictic information gathered from praxeology as well as interpretive understanding to track the cause and effect relations that dictated the past. In this respect, i'd say the relation between Economics and Economic history, is like that between mathematics and physics. No physicist would deny the laws of mathematics or engage to test them when studying natural phenomena as they already underly the backbone of his theoretical apparatus used to discover normative relations in the real world. Hence, the Austrian Economist uses Economics as a theoretical superstructure with which to interpret relations in the past and present. Hence, a large number of Austrian school theorists predicted the 2007-2009 housing crisis, the 2001 bubble, among others, while Mises did predict the Wall Street crash 4 years in advance. However, they did not make these predictions "scientifically" but entreprenurially, using the correct theoretical knowledge they'd already harnessed deductively. Now having elaborated on the Austrian school, I must agree with you as far as you're statements refer to every other school of economics. They question basic laws in their methodology, adopt totally unrealistic ideals in Friedman's methodology, attempting to use historical statistical data as way to "test" their theories, advice they never really adopt. Hence they mostly don't practice what they preach and tend to copy the norms of Physics, while not making much use of them apart from perhaps mental masturbation through applied mathematics. I would say these other schools, especially the dominant neoclassical synthesis richly deserve the title "pseudo-science". Phew! For more, I recommend a visit to mises.org

I think you misunderstand my point. I also would disagree with you on Economics not being a real science, but that is another debate for another time, though I think your view reflects the general view often found in scientific debate concerning science as pretty much what Karl Popper and the Logical Positivists say it is. I never claimed, and my objection never was about whether legal courts could rule on a scientific issue, for me such an assertion is so nonsensical I don't even think it should merit serious discussion- it's a joke. My point was and remains that scientific consensus has been and does remain an unreliable form of checking the validity of scientific statements. Arguments from authority are weak, and require checking, although I will concede a healthy scientific community when functioning well can keep a lid on things.

Right, but I there is no necessary relation between where scientific consensus is and the development of correct scientific knowledge, a word I am stressing as we are largely arguing semantics and the word is more closely related with the source of the english word "science" than anything to do with the opinions and assessments of the "scientific community." You only need to think of the Phlogiston or caloric theory of heat, to realise the amount of time that can be wasted on the major paradigms sometimes pursued in the mainstream without critical reflection. I think it would be worthwhile if readers of this forum would pursue Thomas Kuhn's work on the development of science. I think it would be unfair to rule out Social Darwinism as simply an ideology. I think it was rather bad science, with intellectual roots dating back to Darwin's book(I believe his cousin was a major proponent), and was pursued as a major scientific project by many otherwise good scientists. With a rush to judgement, it was used to justify racist political ideologies and policies. Indeed, in a very similiar way Keynesian Economics is used to justify disasterous economic policies. I think it is naive to not realise how ideology can influence the development of science and vice-versa.

Interesting, the woman who inspired me to write that has recently written an excellent mises.org article on the very subject, and appeared at the meeting clearly stating the problems with government healthcare. I also had the pleasure of meeting her at Mises University 2009!

I think his point is that there is a difference between scientific consenus and what is scientifically correct, no matter how close they may often seem. It is along similiar lines to the difference between inference and implication. I think to believe otherwise is rather naive, and reflects the view that all scientists are somewhow "pure Popperian falsificationists". We all have our biases and agendas, even if we don't always notice them. A good example of a scientific consensus that was not only wrong, but had disasterous implications, was the Social Darwinist and Eugenics movement, fashionable among intellectuals before the 2nd World War. Only reasoning and evidence can establish and rule out arguments in scientific debate.

Indeed, to speak of a "right" to healthcare is contradictory use of terminology. The concept of a right defines freedom to act within the boundaries of the rights of others. Hence it is contrary to the notion of a "right", to demand and impose demands on taxpayers, and to finance debt through inflation, as well as to impose obligatory servitude on medical practitioners to provide "public healthcare", and this is completely aside of all the other problems of such a program.

True, if you increase spending by debt financing and direct and indirect inflation a lower percentage of your total expenditure will rely on taxation income. I don't think this makes things any better "fiscally conservatively" and in many ways(like current Fed policy prolonging the current business cycle), introduces many other harmful distortionary effects on the economy. I do agree that Bush is to blame with a lot of this, along with Clinton and all the other clowns that have occupied the White House for decades. This doesn't give Obama a licience to try and emulate Bush on Steroids to try and induce some sort of mythical Keynesian "flash in the pan." Western economies have unfortunately been consuming thier capital attempting this idiocy for decades now, I can only hope they one day stop. It's also a shame that "conservatives" only protest when a Democrat is wasting money at will, but that doesn't mean they shouldn't.

Given the lack of interest with debating this important issue, I thought I'd spice things up with a visual indication: Also, the article is attached to this post as a word document. blogpost1.doc

Hardly, terrorists are people who make systematic use of terror to coerce and bend the will of those they consider opponents. I think I would be considered fairly "radical" myself on this forum, since I'm not a statist, and would like economic, as well as social freedom. However, this in no way implies I advocate violence or terrorism. If your comment was a joke....great:doh:

I think probably this hasn't led to a discussion perhaps because I did not provide a good enough gist of what the article's about. In any case, here's the opening paragraph: "Upon reading the excellent exposition given by my colleague on this subject, I felt the time was ripe to further shine some more light with my own understanding, on the issues regarding the Federal Reserve's so-called independence. The assertion that it has any is largely a red herring, and as many readers on this blog familiarising themselves with the Austrian School of Economics may be realising. The intellectual focus on the central bank maintaining some sort of elusive "independence", presents a painfully naïve understanding of the incentives and interests of the esteemed actors of our current monetary system. These are the politicians, their banking system and the central bankers. " Any discussion or comments?

anarchocapitalist, so not even on the political map as far as the OP goes. I used to be a liberal in the classical, unperverted sense of the word, like Frederic Bastiat for instance.