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whereaminow (73.77)

A Machine That Turns To No Effect

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May 01, 2010 – Comments (74)

You won't run into economic proofs very often in your life.  Here's one:

The Economic Calculation Problem

Let's start with a scenario that keeps statists awake at night, checking under their bed for Walmart demons: because of an unregulated, untaxed free market, one company achieved such tremendous economies of scale and such a tremendous competitive advantage that it has driven out all competition in all areas of production.  Basically this company now has a monopoly on every factor of production in the world, they have disregarded the Law of Comparative Advantage by refusing to enter into business agreements with anyone else, and no one can possibly compete with them. This scenario was depicted in the popular animated movie Wall-E.  A megacorporation named Buy N Large has used every conceivable economic and political manipulation to control every resource on the planet.  We'll discuss at another time whether a free market could produce such an entity.

Quick note: for the purposes of this proof, it does not matter if our company owns all the resources available or that it uses the strong arm of the State to direct all of the resources.  The method is irrelevant to the proof.  As you are about to see, the fact that there is no exchange in the factors of production is the integral aspect.

Choosing to Produce

Let's pause for a moment and consider the following question: how does a company (or an entrepreneur) decide what to produce and how to produce it?  In a market economy, there are literally millions of ways that the factors of production can be combined to produce a good.  For example, there are thousands of different types of labor (unskilled, skilled, managerial, robotic, and each of those categories are broad brush strokes) and many different natural resources, different types of capital goods (i.e. machines), land, etc.. 

To simplfiy, a company has to do two main things when it embarks on a project.  First, it must attempt to anticipate future prices for the goods it plans to produce.  Second, it has to determine the costs of producing those goods.  If the company correctly anticipates future prices, it will profit.  If it is wrong, it will fail.  We know this.  But what if the company had absolutely no idea what the costs of producing a particular product were?  How would it know if it made the right product in the right way?  What type of feedback would it receive to know that it was heading down the right path or the wrong path?   In a normal market economy, company X may produce a good at $2,500 knowing that the cost of production is $1,500 and that it makes a $1,000 profit.  But what if it didn't know the cost of production?  How would it know that $2,500 marked a success or a failure?

Now let's go back to Buy N Large.  In our scenario, they own or direct all the factors of production.  There is no exchange. You can't exchange with yourself.  Since there is no exchange, there are no prices - certainly not a price system that in any way reflects the value of alternative uses of the factors of production.

Prices arise from exchange.  Not only are consumer goods exchanged in a market economy, but producer inputs are exchanged as well.  The latter can be grouped into four broad catagories: labor, land, natural resources, and machinery.  Each of those categories is a broad aggregation of many hundreds and thousands of categories.  The prices of these factors of production is imputed back from the value of the goods that are produced.  I can't stress that last sentence enough.  If you don't grasp that concept, you can never have a full understanding of how a market economy works. I'd be happy to explain it further in the comment section if you desire. 

Know-How, No Matter

So Buy N Large has no costs of production at its disposal.  We can assume that it has all the technical and scientific know-how to produce any item. It still won't matter.  The question the company has to ask itself and answer is should they produce this good or that good?  Should they?   And how should they produce it?

Should they produce new computers or new cars? Should they use a robotic plant or a plant that relies on more unskilled labor?  Should they close a plant or expand a plant?  Should they cease producing an item altogether or double production?  It depends.  It depends on scarcities of labor, scarcities of related goods, scarcities of other factors.  They don't know these things.  They can't know.  They don't know the value of the alternative uses of their factors of production because they don't have a unitary measure, a price system, that tells them what it costs to produce them!

So there is absolutely no way that Buy N Large can make production decisions that reflect the output of a market economy - the wants and needs of consumers.  The result would be total chaos and the destruction of capital.  Buy N Large's situation is impossible.  Even if they were to be incredibly lucky and they correctly anticipated the value of a good they produced, they wouldn't know if the endeavor was the best use of the factors of production, since they don't know what it cost them to produce it in the first place.  Likewise, they have no idea if the good they produced was a flop.

Though the situation I have descirbed is based on fiction, it is exactly the scenario that would play out in an entirely Socialist economy, where one entity: the collective, which is really just a State monopoly, owns every resource.

This proof is the Economic Calculation Problem or Economic Calculation in the Socialist Commonwealth.  It proves that a Socialist economy is impossible.  The proof was delivered by a student of Carl Menger named Ludwig Von Mises in 1920.  For 90 years, it has either been ignored or dismissed by academic economists, who have longed for the day when their State masters will ask them to centrally plan the glorious new world economy.

The Machine That Turns to No Effect

The Soviets had a few methods for dealing with the Economic Calculation problem, and it was by no means ever dismissed in Russia.  Their economists had to eventually concede that Mises was right even as Western "intellectuals" were still fawning over Soviet production numbers.  The CIA, for example, thought that Russia was an economic powerhouse because of its constantly rising GDP.  In the end, all that waste accomplished was turning Russia into "Bangladesh with missiles." 

The Soviet production agency, GOSPLAN, attempted to set production targets for the various industries, and then each industry's planner would set targets for each firm.  The targets were quantitative measurements, as in x tons of steel, or x tons of nails.  If you exceeded the target, you got a bonus.  If you failed.... well you didn't want to fail.  But you didn't want to succeed by too much either, because your target would be raised and you'd have an even tougher task ahead of you.  So it built in a system of mutual lying, where everyone exceeded their targets by just a little bit.  Hence the steadily rising Soviet GDP.  But, and this is the crucial point, the Soviets had no way of knowing the value of anything they produced.  During a famine in the 1980's, silos sat empty and tractors rusted while laborers were stuck in factories... making more tractors.  The wheel was turning but to no effect.  A popular Russian cartoon joke goes as follows:  a Russian nail factory manager is meeting with his central planner.  In the backround are a train and a giant nail that takes up the entire train.  The factory manager exclaims, "we have met our production target, Comrade!"

Note: a fuller discussion of Soviet calculation would include the bartering between industries, allowing black markets to thrive to help determine costs, copying prices from Western manufacturers, and global exchange of Russian resources - but we'll cut it short here. The Soviet economy was only fully Socialist during the War Communism period under Lenin.  After that, it mixed in as much Western pricing as possible and more resembled the Post Office in a Capitalist country rather than a Socialist utopia.  Had it remained fully Socialistic, it would have collapsed far sooner than 70 years.

Criticisms

Finally, I'll address some of the criticisms of Mises' proof.

The first people to attack Mises were the German economists of the Historical School.  These guys weren't very bright and they rejected theoretical approaches to economic problems. Their solution was that the State could just add all of the factors of production up, without a unitary measure.  Mises asked, how can you add tons of steel to thousands of hours of unskilled labor to x square feet of plant space etc etc?  You can't add apples and oranges.  So Mises dismissed them rather easily.  This method ended up being similar to GOSPLAN's approach, but in practice was completely useless, as Mises predicted.

The Marxists came next, claiming that they had a unitary measure: labor hours.  We'll just take labor hours as the measure of a good's cost and determine our profits and losses from there.  But, Mises said, labor hours is purely semantical.  The proper term is labor hours of an engineer, labor hours of a janitor, labor hours of an accountant, etc.  There are thousands upon thousands of different types of labor in a market economy, each with their own market, and even within each category of employment you can't say that Engineer X and Engineer Y have the same skills and experience and hence the same market value.  Calling it all Labor Hours is a semantic trick and nothing more.  Besides, Mises pointed out, in a market economy value does not come from mere work, but from the marginal utility that a good provides to consumers.  This is the core discovery of the Marginalist Revolution that refuted Marx's Labor Theory of Value in the first place.  So again, Mises smashed this objection.

In the 1930's, Mises' argument was translated to English and the next opposition came from the Neo-Classical school.  Their solution was more nuanced, but ultimately just as flawed.  They proposed a trial and error method, known as the Lange-Lerner-Taylor solution.  The idea would be to leave everyone in place in their current capacity in the market economy, and have the central planners estimate price changes through trial-and-error.  If there is a surplus of an item, lower the price.  If there is a shortage, raise the price.  This child's game, and that is what Mises called it, actually became the Orthodox defense of central planning in American universities until the fall of the Soviet Union temporarily shook the academic world.  Mises' objection was very fundamental and insightful (and roundly ignored or dismissed.)  Mises said, you are completely ignoring three important facts:

First, as I talked about above, prices are imputed back.  Just because there is a shortage in laptop computers, that doesn't tell the central planner the best way to produce them at a lower the cost or whether lowering the cost or producing them at all is the best use of resources.  You still  don't have any costs of production to measure the alternative uses. 

Second, even if you could collect and process the level of shortages and surpluses throughout the entire market economy (consider that in an American grocery store alone there 70,000 products on average), using super computers to calculate all of these factors, and imputing all of these values back to the producer goods, you are missing a key point.  Many plants and machines in existence today shouldn't be in existence.  How do you account for capital depreciation, and the current wasteful production processes that would otherwise be replaced when the market no longer values those resources.

And finally, these economists fail to understand the impact of the entrepreneur in a market economy.  The best way to explain this is through an example.  In the early 1980's, IBM had the technology to produce personal computers. At the time, their CEO said we're not going to do it because we don't think businesses will use them.  They are just going to be a game platform for bored rich consumers.  They were clearly wrong.  Steve Jobs disagreed, manufactured the Mac, then Microsoft came in, and the rest is history.  Imagine Steve Jobs trying to explain to a central planner why the factors of production in his plant should be used to produce a technology that no one is certain will be useful.  And imagine the plant manager and the planners trying to determine if the costs of production justify the demand they discovered if they actually went through with it.

Yet, thse objections were ignored. To this day, every country, including the United States, engages in some level of central planning.  Every country employs central planning of the money supply.  Mises himself was barred from teaching in America, land of the free and the greatest market economy of his day, because of his economic theory.  Central planning continues to charm the ruling class despite Mises' work.

So I hope this post enlightened you and stimulates thought for your weekend.  I'd be happy to engage any questions or objections in the comment section.

Have a great weekend!

David in Qatar
(p.s. a debt of gratitude is owed to Professor Joseph Salerno for his excellent explanation of economic calculation at Mises U 2009.)

Sources and some further reading:

Economic Calculation in the Socialist Economy by Ludwig Von Mises
The End of Socialism and the Calculation Debate Revisited by Murray N. Rothbard
Intellectuals and Socialism by F.A. Hayek
An Interview with Yuri Maltsev by LvMI
The Decline and Fall of Gorbachev and the Soviet State by Yuri Maltsev
Why A Socialist Economy is Impossible by Joseph Salerno

74 Comments – Post Your Own

#1) On May 01, 2010 at 1:29 AM, whereaminow (73.77) wrote:

Link at Freedom Chatter

David in Qatar

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#2) On May 01, 2010 at 7:25 AM, devoish (98.76) wrote:

David,

This is a difference between a "proof" (say proof enough times and people might not notice there is not one is good marketing) and a theory.

You provide an example of something you label Socialism which used to be labeled Communism which was actually purely neither. You fail to consider China or Korea as your examples.

But the bottom line is to "prove" something you have to put it into the real world. And in every instance in every corner of the world pure capitalism has been tried and replaced with some form of organisation or Government or social standards.

Where is this "free market capitalist utopian success story"?

If it has disappeared off the face of the Earth - extinct like the Dodo Bird - perhaps there is some fatal flaw, a weakness in the idea you are refusing to see that prevents its existence in the real world.

I however, cannot help but see feudal England in what you describe. Privately owned land, run by its owners, making their own laws, applied to their own lands, collecting taxes called rent, supported by property owner collusion and squeezing out opportunity for those who are not your own sons and daughters unless a new land is found across an ocean.

Truthfully though, I think yours is just a marketing machine, selling anti - Democracy ideals that you do not really believe in, probably for money.

See you this evening.

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#3) On May 01, 2010 at 7:33 AM, whereaminow (73.77) wrote:

devoish,

I am starting to suspect that you are a crazy person.  You have written some 400 blogs here and never once developed a coherent argument.  The evidence is mounting.

If I were to include Mao's China or Kim's North Korea, the case against monopolistic ownership of the factors of production becomes stronger, and I think everyone knows that.  Does it really need to be added? 

There is a simple way to disprove Mises' argument.  Just tell me how producers will determine what goods to produce without knowing their costs of production.  

Unless you can do that, you're just blowing hot air.

The market economy, free or hampered by interventionism, has never made the rivers run blood red.  That alone is enough motivation to support it.

What is your fascination with my income?

David in Qatar 

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#4) On May 01, 2010 at 8:03 AM, dbjella (< 20) wrote:

Great post David. You must have spent quite a while on this one.  I hope you are well.

You stated that Mises wasn't allowed to teach in the US, do you know who prevented that from happening? 

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#5) On May 01, 2010 at 8:28 AM, whereaminow (73.77) wrote:

dbjella,

Thanks, Doug! I have been working on the wording of this post for a couple of weeks as I couldn't grasp a simple way to explain the concept.

Mises' met an academic culture in the United States (and elsewhere) that was anticapitalist, pro-Keynesian, pro-inflation, pro-intervention, etc. He was not well received, much to the detriment of his would-be students:  

"In the United States as in his native Austria, Mises could not find a paid post in academia. New York University, where he taught from until 1945 until his retirement at the age of 88 in 1969, would only designate him as Visiting Professor, and his salary had to be paid by the conservative-libertarian William Volker Fund until 1962, and after that by a consortium of free-market foundations and businessmen. Despite the unfavorable climate, Mises inspired a growing group of students and admirers, cheer­fully encouraged their scholarship, and himself continued his remarkable productivity.

Mises was also sustained by and worked together with free­-market and libertarian admirers. From its origin in 1946 until his death, Mises was a part-time staff member of the Foundation for Economic Education at Irvington-on-Hudson, New York; and he was in the 1950s an economic advisor to the National Association of Manufacturers (NAM) working with their laissez-faire wing which finally lost out to the tide of “enlightened” statism."

Biography of Ludwig von Mises (1881-1973)

David in Qatar

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#6) On May 01, 2010 at 9:18 AM, SkinnyWallet (53.40) wrote:

"The market economy, free or hampered by interventionism, has never made the rivers run blood red.  That alone is enough motivation to support it."

There are so many people that dismiss socialism as impossible, yet  fail to hold the same candle of scrutiny to capitalism. When socialism fails in the real world, these individuals say it failed because socialism is inherently flawed, and its application unsustainable.  When capitalism fails, they say it failed because of all the externalities that distort the free market economy and "hamper" its natural course.

If I recall 19th and 20th century American history, I can think of a few examples where capitalism, left to run its unhampered course, created organizations so powerful and monopolistic that their power was ultimately detrimental to society (think Upton Sinclair and Ida Tarbell). It's why I quoted you above this post.  That statement, I'm afraid to say, is very false.

The point I'm trying to make is this:  A pure implementation of capitalism in the real world would be just as successful as a pure implementation of socialism in the real world.  Which is to say they would both end up failing miserably.  Marx never expected communism and capitalism to be rival economic theories.  He instead posited that a capitalist system would eventually become communist, once the corporations merged with each other to create the monolithic organization that would become the new state.  Think of the current bank crisis and that thought doesn't seem as crazy anymore.  Anyways, according to Marx, a capitalist system would turn communist if it was left free and unhampered to run its natural course.  I, for one, am happy we have "externalities" like health standards, anti-trust laws, and regulation to prevent that from happening.

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#7) On May 01, 2010 at 9:35 AM, whereaminow (73.77) wrote:

SkinnyWallet,

You are certainly entitled to believe that unregulated capitalism would fail, but you have to offer proof.  The burden is no you, as I have shown the proof that socialism would fail.

Now, let's hit up some points on your argument.  Concerning Upton Sinclair, why do you think the American Meatpackers Association (I think that was the name) so thoroughly supported regulation following the reaction to Sinclair's book?  They knew that the costs of regulatory compliance would keep them in business and keep out the competition that would have destroyed them following Sinclair's revelations.  Why didn't consumers turn to other producers?  The answer is that the very regulations designed to protect consumers allowed the incompetent producers to remain the only business in town.  Talk about your unintended consequences of intervention!

Concerning Ida Tarbell, we need to actually take a minute and look at the historical record.  It's right there.  Let's actually look!

The Non-Orewellian View of American History - by Tom Woods

We’ll stick just to the claim that the "free-market system" gave rise to "monopolies." (For our purposes we can define a "monopoly" in the colloquial sense of a single or overwhelmingly dominant supplier of a good or service, since this is clearly the sense in which people who peddle this view intend it.) This is pretty much what every child is fed in our official propaganda centers, as indeed was I all through high school. Put forth in tandem with this claim are lurid tales of the so-called robber barons, who we’re told ruthlessly exploited the public to satisfy their insatiable greed – a human inclination that never seems to afflict our selfless public servants, I might add.

To be sure, no one should try to excuse those who sought to use state power to cripple their competitors. Burt Folsom made a helpful distinction between political entrepreneurs, who got ahead using underhanded tactics like this, and market entrepreneurs, who prospered because they produced what the public demanded at prices people could afford.

Andrew Carnegie almost single-handedly managed to reduce the price of steel rails from $160 per ton in the mid-1870s to $17 per ton in the late 1890s. Given the importance of steel to a modern economy, that massive price reduction yielded greater wealth and a higher standard of living for everyone. Carnegie was so efficient, in fact, that the 4000 people who worked at his Homestead plant in Pittsburgh produced three times more steel than the 15,000 workers at Germany’s Krupps steelworks, Europe’s most modern and renowned facility.

Likewise, John D. Rockefeller was able to reduce the price of kerosene from one dollar per gallon to ten cents per gallon. People could finally afford to illuminate their homes. Rockefeller also developed 300 products out of the waste that remained after the oil was refined. Claims that Rockefeller was an "unfair" competitor (whatever that means), the usual gripe of those who cannot deliver a product at prices that sufficiently please consumers, were laid to rest half a century ago in John S. McGee’s study for the Journal of Law and Economics. (John S. McGee, "Predatory Price Cutting: The Standard Oil (N.J.) Case," Journal of Law and Economics 1 [October 1958]: 137–69.)

"Ironically, contrary to the consensus of historians," writes Gabriel Kolko, "it was not the existence of monopoly that caused the federal government to intervene in the economy, but the lack of it."

Speaking of the situation that faced Standard Oil, Kolko writes:

"In 1899 there were sixty-seven petroleum refiners in the United States, only one of whom was of any consequence. Over the next decade the number increased steadily to 147 refiners. Until 1900 the only significant competitor to Standard was the Pure Oil Company, formed in 1895 by Pennsylvania producers with $10 million capital…. By 1906 it was challenging Standard’s control over pipelines by constructing its own. And in 1901 Associated Oil of California was formed with $40 million capital stock, in 1902 the Texas Company was formed with $30 million capital, and in 1907 Gulf Oil was established with $60 million capital. In 1911 the total investment of the Texas Company, Gulf Oil, Tide Water-Associated Oil, Union Oil of California, and Pure Oil was $221 million. From 1911 to 1926 the investment of the Texas Company grew 572 percent, Gulf Oil 1,022 percent, Tide Water-Associated 205 percent, Union Oil 159 percent and Pure Oil 1,534 percent".

Standard Oil’s decline preceded the antitrust ruling against it in 1911, and was "primarily of its own doing – the responsibility of its conservative management and lack of initiative."

=======================================

So why I am supposed to hate these guys?

David in Qatar

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#8) On May 01, 2010 at 9:45 AM, Lostromo (< 20) wrote:

Brilliantly written, David.   After reading your article, I had to ask myself why throughout history the powers-that-be fight tooth-n- nail and at every turn, any non-socialist solution?  In other words, why do they despise a truly free market?    My inevitable conclusion is that they cannot allow the masses, (the labor force) to rise above what is for all intents and purposes, slavery.    In modern times, we have the illusion of a free market.  Segueing into what SkinnyWallet said above, that is the purpose of Capitalism: it's an illusion of a free market, but the influence and control from gov't and corporations still exist, just in less of a direct way than Socialism or Communism.

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#9) On May 01, 2010 at 10:03 AM, SkinnyWallet (53.40) wrote:

David,

you write a very well worded and informative response, but I'm afraid you didn't address my arguments.  The fact you prove through these examples is that these organizations had to be intervened upon through an inherently non-capitalist vehicle (regulation) to prevent them from doing harm to their society.  I'm not saying good or bad, I'm just making the point that it isn't traditionally capitalist.  Whether these corporations were happy about it or miserable over it, its not traditionally capitalist.

You make the point in your post that without allowing black markets to exist, the soviet union would have fallen much faster than it did.  It's a claim I'm inclined to agree with, even if there is no evidence for it here.  Just like the socialist model needed non-socialist vehicles to assist its longevity, so too does capitalism.  To ignore this in the face of current events is to idealize (perhaps idolize) an economic theory that, much like every other theory, is inherently flawed.   

We shouldn't let capitalism run wild, it would be just as bad as the scariest thoughts of socialism doing the same thing.  Don't do what you accuse the western "intellectuals" of doing in the 1980s, or if you do, don't pretend it is different just because you're living in 2010. 

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#10) On May 01, 2010 at 11:07 AM, whereaminow (73.77) wrote:

SkinnyWallet,

I will if you'd like take a look at some of the implications of a purely free market (they have existed, most recently California in the 1850-1900 period and the Not-So-Wild-West, which is mostly legend, and large parts of the American economy from 1780 to the mid to late 1800's), in a follow up post.  I hope you keep reading.

Here, however, I want to help my fellow Fools understand the implications of this particular economic proof, as it is not well known or recognized.

Thanks.

David in Qatar 

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#11) On May 01, 2010 at 11:09 AM, whereaminow (73.77) wrote:

Lostromo,

I think it would help if we defined the terms.  Certainly if by Capitalism as the marriage of big government and big business, then free market supporters oppose it.  Since it was Marx that coined the term, I prefer to let the Left set the terms on it anyway.  However, in our circle, we usually refer to that as Corporatism.

David in Qatar

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#12) On May 01, 2010 at 11:35 AM, SkinnyWallet (53.40) wrote:

I look forward to reading your subsequent posts, David.  I found this one very informative.

here's my concern:

"For 90 years, it [the proof] has either been ignored or dismissed by academic economists, who have longed for the day when their State masters will ask them to centrally plan the glorious new world economy." 

"Yet, these objections were ignored. To this day, every country, including the United States, engages in some level of central planning.  Every country employs central planning of the money supply.  Mises himself was barred from teaching in America, land of the free and the greatest market economy of his day, because of his economic theory.  Central planning continues to charm the ruling class despite Mises' work."

These are very loaded statements, David, statements that the proof does not support.  The proof is merely designed to show that the rational choice methodology behind free-market economics is impossible to replicate in a socialist system.  The proof does not inherently negate the social value of SOME central planning within capitalist systems, nor does it negate the value of corrective social externalities on free-market capitalism.

"the knowledge of the fact that rational economic activity is impossible in a socialist commonwealth cannot, of course, be used as an argument either for or against socialism".  Ludwig Von Mises said that.  I would go further and say that not only should it not be used as an argument against socialism, it should also be avoided as an argument for pure, unhampered capitalism.

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#13) On May 01, 2010 at 11:41 AM, whereaminow (73.77) wrote:

SkinnyWallet,

Agreed, however, without a proof forthcoming I can say that Mises addressed "partial socialism" in detail in both Socialism: An Epistomological Anlysis and Human Action and he came to the deductive conclusion that it leads to full scale intervention - or more accurately, these interventions lead to complete takeovers of entire sectors of the economy.

I would point to Banking, Health Care and Auto Manufacturing as areas where have seen one intervention cause more interventions and eventually lead to complete takeover during my lifetime.

David in Qatar

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#14) On May 01, 2010 at 12:01 PM, binve (< 20) wrote:

David, this is another fantastic post! Thanks for sharing man!

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#15) On May 01, 2010 at 12:02 PM, SkinnyWallet (53.40) wrote:

Unfortunately I've reached the end of my knowledge on Mises and the Proof, as I have not read Human Action in its entirety.

I'm afraid I can't agree with you on the statement regarding the Banking, Health Care, and Auto industries.  The logic leaps you're taking are a bit too far apart for me.  Furthermore, its hard to generalize within any one of these industries, much less across them.  I can't think of a single case where one intervention in an industry lead to multiple interventions in the same industry, which then lead to a complete takeover of the entire industry (in a capitalist system).  Healthcare may be the closest one, but even here I feel the need to note that although there are instances of government-run healthcare in the world (and the US, even with its new legislation, is certainly not one of them), I have a hard time labeling healthcare an "industry" like banking and automobiles.  In some places, healthcare is deemed as a social service and as such, is handled more akin to education and defense (a generalization of my own, I admit).

Thanks for taking the time to address my comments.  Good luck to you! 

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#16) On May 01, 2010 at 12:12 PM, RainierMan (40.03) wrote:

I don't have a guiding economic theory, per se, so don't take this as an argument; these are just questions that have arisen in my mind during the past year as Armageddon fails to happen:  

Weren't the Mises proponents the ones saying that the Fed was powerless to keep interest rates down last year? Weren't they feeding Krugman his privates because he was saying we needed to stimulate and keep interest rates down to stimulate the economy. Weren't they saying the economy couldn't be kick started with stimulus and "pushing on a string" (lowering interest rates)?

Aside from potential negative effects down the road of the stimulus and low interest rates, which I fully acknowledge, isn't it basically working? Hasn't the criticism moved from, "It will never work" to "It's only a recovery driven by low interest rates and stimulus".

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#17) On May 01, 2010 at 12:22 PM, whereaminow (73.77) wrote:

MichaelinWA,

Weren't the Mises proponents the ones saying that the Fed was powerless to keep interest rates down last year? 

No. They said that in a free markt economy interest rates would be higher and there would less credit to get drunk off of in the first place.

Weren't they feeding Krugman his privates because he was saying we needed to stimulate and keep interest rates down to stimulate the economy.

Yes, because they argue that giving the hungover alcoholic more of the hair of the dog is bad medicine.  Low interest rates caused the boom that must eventually bust.

Weren't they saying the economy couldn't be kick started with stimulus and "pushing on a string" (lowering interest rates)?

No. They said you will only be reinflating the bubble, which is not a long term solution.

Aside from potential negative effects down the road of the stimulus and low interest rates, which I fully acknowledge, isn't it basically working?

Depends on what you consider a solution.  If you wish to reinflate, then yes, job well done.  We don't consider that a solution.

Hasn't the criticism moved from, "It will never work" to "It's only a recovery driven by low interest rates and stimulus"?

No, we said it will cause even more dislocations and malinvestment, leading to an even bigger crash, while also further eroding the value of the dollar.  It remains to be seen.....

David in Qatar

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#18) On May 01, 2010 at 12:23 PM, kdakota630 (33.34) wrote:

I had a similar post to binve's a few hours ago.  I'm not sure what happened to it, but keep up the great work.  Another fantastic post (and replies).

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#19) On May 01, 2010 at 12:29 PM, whereaminow (73.77) wrote:

binve,

Thanks man!

SkinnyWallet,

Fair enough. I won't pretend to argue that economies as complex as ours can be hashed out in the comments section of a post.  

As it is, I am trying to condense thousands of pages of intellectual discussion into a 20,000 character post limit while making it somewhat coherent and readable.. and interesting?  Hopefully, I accomplished at least that much :)

David in Qatar

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#20) On May 01, 2010 at 12:31 PM, RainierMan (40.03) wrote:

David: Ok, fair enough. What is their take on Japan, which has been doing the whole Keynesian thing since, what, the 90's?

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#21) On May 01, 2010 at 12:40 PM, whereaminow (73.77) wrote:

MichaelinWA,

They managed to maintain price stability, albeit while also giving the country a two decades long recession.  The record there isn't flattering to Keynesianism.

So far no central bank has ever managed price stability and growth for any notable period of time.  

David in Qatar

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#22) On May 01, 2010 at 5:52 PM, MikeMark (30.26) wrote:

Hi David,

Great post! Every bit of it right on and easy to understand.

I've been taking some time to think about Steven's (devoish) comment this morning. My first reaction was to pen something quick and nasty about his lack (of various things). Thankfully, I was busy with my family, so I couldn't take the time. It's nice when events happen that prevent us from doing things we really don't mean or want to do.

After a while I began to realize that in a way, I am like he is and he is like me. We are all at various stages in our development and understanding of our world and what it can be. As children we acquire many beliefs that we carry with us through life. Some are true. Some are not. As youth we learn more. Some of our childhood beliefs get changed, some remain. Other beliefs are added. This process continues throughout life for some. Unfortunately for some it seems to end.

In fact, to me that process is an indication of what I will call intelligent life. In my life I try to foster this aspect. I try to be humble enough to change my mind and my beliefs when called upon by learning and events. I think that's true for Steven too, from what little I've read.

In the quest for understanding, sometimes we gain an understanding of something that resonates deep within because we can see the truth of it. That creates a firm and unshakable belief. It couples so well with our other beliefs gained over our lifetime that this piece fits our puzzle perfectly.

But just because that is true and we'd like to share it due to it's rightness doesn't mean that it will be accepted by everyone or anyone. There are plenty of historical examples of individuals who were right, but not accepted or even punished for their beliefs. Imagine what it must have been like to be Galileo or Mises, more to the point.

I think the science of economics has been pushed back into (or held back in) its infancy. It isn't like mathematics, which everyone begins learning from the age of about 3 now. It isn't like chemistry which we begin teaching in various ways at about 4 years old. It isn't like thermodynamics that my son had his first experience with when he put his hand on the hot wood-stove at two years old. Even though children learn about money seemingly way too early, we don't know what or how to teach them about economics. It isn't like almost any other science. It's the invisible hand that Adam Smith talked about.

Economics is the science that deals with understanding the action of individuals, the movement of the entire society and the interaction of societies through their markets and laws. In a way it encompasses everything else. It seems to me that the problem it currently has as a science is our desire to control everything. Mankind has this deep belief that we can understand it well enough to control it. It is the belief that an engineer has that she can apply her knowledge of physics to create something useful. It is the belief that an auto mechanic has that he can repair the automobile or even improve it. We create and build everything. Surely we can create and build an economy!

But an economy isn't built. We don't use that language because it doesn't fit. An economy is born. It grows. It shrinks. It expands, recesses, maybe dies. It is a living thing. More like a garden or a body. A rose to be cared for and admired. This requires a farmer's or a doctor's touch. The farmer and the doctor both know that they don't actually do much to the garden or body itself. Instead they plant the right things, remove the wrong ones and try to provide an environment where it can thrive.

This kind of change in understanding in that scientific community and among people may take more than a lifespan. It has already taken more than a lifespan.

Patiently continue.

-MikeMark

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#23) On May 01, 2010 at 8:15 PM, devoish (98.76) wrote:

But the bottom line is to "prove" something you have to put it into the real world. And in every instance in every corner of the world pure capitalism has been tried and replaced with some form of organisation or Government or social standards.

Where is this "free market capitalist utopian success story"?

- Devoish

So far no central bank has ever managed price stability and growth for any notable period of time.   - David in Qatar

You are certainly entitled to believe that unregulated capitalism would fail, but you have to offer proof.  The burden is no you, as I have shown the proof that socialism would fail. - David in Qatar

Price stability is measured in dollars, so is GDP. What rate of "growth can not be also described as "unstable prices" in yourmarketingtoday? Your "free market" theorys also create unstable pricing as some industrys replace others (something that also happens in the American economy you demand price stability of.

See david, one the obvious problems I have with your politics is that prices were generally stable with the excepion of the 70"s free market disruption caused by an oil cartel. In fact it is becomingh one of the problems I have with my politics that would like to see central banks disolved. You are forcing me to think about what your politics requires and is, and it seems to be feudalism to me. And your posts are forcing me to rethink my position against a central bank, based purely upon results, but  I am still unhappy with the bailing out of private industry when that industry is the financial one. Employees need help, that is what Democracy now recognises that you refuse to acknowledge or prefer to fight.

And until you find that "free market utopia" the harder work of Governing will continue to be needed - the coherent argument you have chosen to miss in almost 400 posts over four years and very few of them political until Lordz and you arrived.

You are certainly entitled to believe that unregulated capitalism would fail, but you have to offer proof.  The burden is no you, as I have shown the proof that socialism would fail.

You have also written a few posts - 220 in less than one year, most saying that unregulated free markets are a utopian dream in one form or another. Yet you told me that Qatar - a country that nationalised it oil industry at Shells expense and is using that oil money to provide healthcare and transportation to its citizens was a small Gov't success story which you held up to us the first time I asked for an example (Do the people that "rec" you just take your word like you are Jim Jones?). nationalisded like Venezuela just did, a place Libertarians and probably you have called a failing Socialist State for doing so.

There is no doubt - the burden of proof is on you and no one else. Your very questionable "proofs" of Socialisms problems are not and will never be, even 4000 posts from now, "proofs" in favor of your "free markets - small gov't" theorys. Your free market utopia has never existed and could not even survive on a dormatory floor for one year - try it. there will always be someone who says it is not working, just as Democracy has you to serve the same function.

To all those who have not liked hearing my posts in favor of Democratic Government.  You have nothing better.

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#24) On May 01, 2010 at 11:29 PM, whereaminow (73.77) wrote:

MikeMark,

That was a great comment, Mike.  Thanks for your support and insight.

I have to admit that it probably isn't true that devo is actually crazy. Under closer inspection, I would say that the difference between he and I is this:

I believe ideas shape and explain events and so you need to understand the ideas that shape action in order to see why events unfold as they do.

He believes events explain themselves and that history evolves progressively toward an end, thus a superficialy analysis of current events justifies the current state of affairs.

I'll use an example.  We find a man dancing in his garden. I ask him, "why are you doing this?"   He replies that it will make the skies rain and grow his garden.  From my perspective, his action is rational and explained by the ideas(albeit, a wrong idea) that he held which caused him to choose this particular means to gain an end result.  In order to criticize the dancing gardener, I need an understanding of the idea that dancing causes rain. 

From devo's perspective, reading at DailyKos that Obama is passing a law that everyone needs to dance in their garden to make it rain, the event explains itself and can be justified with because the new law exists.  It has happened, so therefore it is progress.  There is no need to challenge or even investigate the idea that shaped Obama's legislative action.  A well crafted superficial analysis serves as a pronouncement of judgment on ideas that he has never fully investigated - neither the ideas that fit his framework or those he opposes.

David in Qatar

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#25) On May 01, 2010 at 11:47 PM, starbucks4ever (99.53) wrote:

"During a famine in the 1980's, silos sat empty and tractors rusted while laborers were stuck in factories... making more tractors"

Famine in the 1980's? You must be referring to some other Soviet Union! 

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#26) On May 02, 2010 at 12:06 AM, whereaminow (73.77) wrote:

Good catch zloj.  That's a typo. It's supposed to say 1940s.

David in Qatar

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#27) On May 02, 2010 at 12:37 AM, MikeMark (30.26) wrote:

devoish,

I'll bite on this one, Steven. I'd be happy to put it to the test. You must help. Right now there's a nasty big socialistic empire in the way. We'll have to get a portion of it out of the way to give a truly free market a chance. Interestingly, it's in a decay stage, possibly even late decay, so it may not take much to do that.

In fact, I don't think the current attempt to create a socialist (because it isn't even close to democratic) utopia will last another 75 years. Maybe not even 50.

But here's the really interesting thing. We don't have to put it to the test. We already did. During the late 1700s and much of the 1800s. In fact it is the whole reason each of is where we are today! The US, an infant union of states agreed to a free market system in the Constitution of the United States! And it worked so well when it was properly defended that this little infant country became the wealthiest, most capable country in the world in less than 150 years!

Unfortunately, due to a lack of understanding of the beautiful thing they had grown, maybe due to carelessness in learning the lessons of previous generations, some of these masters of the world began to try to manipulate it to their individual, corporate, or private little group's own ends. Not understanding that the unfettered free market placed them at the pinnacle, they embarked on the path of democratic socialism. Those who's job was to defend the constitution forgot what it was about. The lawmakers allowed the lobby of the few to capture their desires. They allowed socialism to become the way. Only because of the strength of the people and their generational memory of what was has that empire lasted this long.

I am proud of what those men like George Washington, Thomas Jefferson and Andrew Jackson accomplished. They offered Washington a kingdom! He declined. What a guy! Jefferson wrote the Declaration of Independence, was a clear defender of the free market and the most intelligent president we've ever had. Andy Jackson reestablished a free market monetary system against the dominion of a powerful central bank. The people thrived because of the efforts of these men.

When do we begin?

-MikeMark

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#28) On May 02, 2010 at 9:38 PM, devoish (98.76) wrote:

David,

As at other times you fall to making my arguments for me, when yours fail. Just as you make Socialism's arguments for Socialists. Whoopity doo. I can win an argument with my wife when I speak for her too. There is no Socialist Country in North America.

MikeMark,

Lets try a thought excersise. Put yourself into the time period you described as "unfettered free markets".

You seem to forget - what did you call it? - "the unfetterd free market" and how that "unfettered free market" treated people of color. I have not forgotten, and I am proud of the Americans who have worked to solve those  "unfettered free markets". When you celebrate those "unfettered free markets" explain to your listeners that you want to be provided the opportunity to be a slave. Explain to your listeners that you want the opportunity to be annihilated like the Native Americans and that you will show your listeners the same respect for your listeners land rights. Explain to your listeners that the first hospital in the New World was funded half by taxes. Explain to your listeners that the second hospital in the New World was funded by King James. Explain to your listeners that you will provide 2000 miles of their land to be taken by you and redistributed for use. I am sure that the Lakota Sioux did not sell their land willingly. Ask Crazy Horse. Explain to your listeners that their children should abandon elementary school to sew your garments.

David will not call that time period "unfettered free markets". He has already whined to us about Governments abuse of poor Cornelius Vanderbilt, - A great capitalist by Davids account, harmed only by Government intervention. Nor would he blame the slaughter of Native Americans on "unfettered free markets", he would blame that upon Government too.

David has told us more than once that there has never been "unfettered free markets" in the history of the world. Yet he demands proven successes from those who have done better.

Here is a short list of Government Interventions into "unfettered free markets" and Davids very incomplete versions of the events surrounding them during the time period you reference.

http://caps.fool.com/Blogs/ViewPost.aspx?source=isesitlnk0000001&bpid=219787&mrr=1.00 

You might also consider the capabilitys and responsibilities of the United States Navy and Merchant Marines during the time period you reference, protecting our shippiing industries from the aggressions of thieves.

So when you and David are done hashing out your conflicting versions of what the late 1700's to early 1800's really was, please get to back to me with a real example of "unfettered free markets".

Thanks for playing.

PS. Allowing the lobby of the few to capture their desires?  That is not Socialism. It is a Plutocracy and it is upon us. Your vote is your defense against their dollars. Strengthen your vote. Weaken their dollars. Remember, if I make Dupont stop dumping waste into a river, you get clean water to.

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#29) On May 03, 2010 at 1:54 AM, whereaminow (73.77) wrote:

Devoish,

Your tricks are cute.  I'm not letting you off the hook.  Tell me how people can make decisions about what to produce if they don't know their costs of production.

Answer the simple question.  You said it wasn't proof. Answer the question.

David in Qatar

 

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#30) On May 03, 2010 at 8:21 PM, devoish (98.76) wrote:

David,

That original post was a lot of rambling nonsense if all you were trying to say was it helps to know costs of production in order to make decisions.

I thought it was a bunch of rambling nonsense  in order to try to slip us the idea that not knowing costs of production prevents a company like "Buy N Large" from happening in a "utopian free market society". - We'll discuss at another time whether a free market could produce such an entity. - and that Government is aso therfore awful.

I thought it also could have been a bunch of rambling nonsense to convince us that Socialist Economies cannot find any way to figure out what to produce without a "utopian free market" to guide their decision making.

You also brought up the idea that this imaginary company(whereaminow - back in the imaginary world) must anticipate future prices for the goods it plans to produce which is distracting rambling nonsense from such a simple question as you now pose.

Of course in the original post, filled with "rambling nonsense"  you were talking about an imaginary world with an imaginary company in an imaginary place I will happily refer to as whereyouarenow and when you close your eyes I can still see you.

In your simple question, without surrounding it with all that "rambling nonsense"  you refer to something other than an imaginary world with an imaginary corporation, something you call a "people".

So when I answer your question I just want you to know that I am going to answer your simple question, as if a "people" is an imaginary "Buy n Large" corporation with complete control of the costs of production and that complete control has rendered "Buy n Large" corporation unable to calculate the costs of production as you described in the original posts.

Of course the premise that having complete control of the costs of production would render a company unable to know the costs of production is purely "rambling nonsense" but thats whereyouarenow.

Tell me how  a Buy n Large corporation with complete control of the costs of production - can make decisions about what to produce if they don't know their costs of production. This is the simple question you are trying to ask correct?

I also noticed in the original "rambling nonsense" post you were not as much concerned about what to produce but how much to charge.

But what if the company had absolutely no idea what the costs of producing a particular product were?  How would it know if it made the right product in the right way?  What type of feedback would it receive to know that it was heading down the right path or the wrong path?   In a normal market economy, company X may produce a good at $2,500 knowing that the cost of production is $1,500 and that it makes a $1,000 profit.  But what if it didn't know the cost of production?  How would it know that $2,500 marked a success or a failure?

Perahps all the rambling nonsense you write made you forget?

I have not spent as much time as you in the imaginary world of whereyouarenow so let me just have some things cleared up:

1) If Buy n Large doesnt know their costs of production, how do they know they have costs of production?

2) Are we trying to figure out how much Buy n Large should charge?

3) Are we trying to figure out what Buy n Large should produce?

Try not to get hopelesslylost in a lot of your own "ramblng nonsense".

Silly Wabbit - Tricks are for kids. :-)

 

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#31) On May 03, 2010 at 10:53 PM, whereaminow (73.77) wrote:

devoish,

Nope. There problem isn't figuring out what to charge.  It's a concern, but the Central Planners already decide what to charge.  That's the price setting part.  They question is still the same.

How do they decide what to produce if they can't determine their costs of production?

Daivd in Qatar

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#32) On May 04, 2010 at 5:42 AM, devoish (98.76) wrote:

How do they decide what to produce if they can't determine their costs of production?

1) If Buy n Large doesnt know their costs of production, how do they know they have costs of production?

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#33) On May 04, 2010 at 6:09 AM, whereaminow (73.77) wrote:

devoish,

Because scarcity exists. 

David in Qatar

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#34) On May 04, 2010 at 1:48 PM, nzsvz9 (< 20) wrote:

David,

Aside from the costs of production question there are many other questions which could be asked for which there are not answers, BnL scenario or Socialist utopia or not such as ...

1. Predict the price of eggs next year in any economy of choice. Now 2 years out. Now 3. Now 4. And so on. Don't like eggs? Show an example of price stability. If maintaining prices is central to planning (turn of phrase intended), then when/where has there ever been price stability? Long term? Shouldn't some central planner be able to fix a price indefinitely? Price stability is a fallacy.

2. Predict the market volume needs of the Sony Walkman(tm) for 1960, 1970, 1980, 1990, 2000? Sony got it wrong.

3. Predict the catch of tuna, salmon, shrimp for any day of the week, any week of the year, any year. Are the fish not following the central plan?

4. Predict the amount of oil left to consume.

5. Predict how many people will be born, or die, or need certain medical treatments.

6. Predict the next impact event from space significant enough to affect population, production ... and even prices :-)

If you don't like the term "predict" then use plan, forecast, project or otherwise crystal ball that figure. It's all extrapolation and unknowable ... at least by any means known.

Perhaps that will change ... not waiting on it though.

Known as the future nzsvz9

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#35) On May 04, 2010 at 8:09 PM, devoish (98.76) wrote:

David,

"A megacorporation named Buy N Large has used every conceivable economic and political manipulation to control every resource on the planet."

No mention of scarcity in the OP.

Of course that scenario makes answering your question easier.

How do they decide what to produce if they can't determine their costs of production?

In either scenario, with or without scarcity, the answer is one or more units less than they can sell.

The cost of production no longer matters, the demand for product does.

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#36) On May 04, 2010 at 10:30 PM, whereaminow (73.77) wrote:

devoish,

I didn't think I had to mention scarcity.  That would be like reminding people that gravity exists when talking abuot flight.  I used an analogy by looking at BnL.  Most people got it.

Your answer is terrible.  First, let's assume that have the perfect foresight to know what will be demanded (even for products which don't exist yet), and that the demand never changes.  The demand, by itself, does not tell the producers what is the best way, or even a good way, to efficiently produce those goods.

In a market economy, there are millions of goods.  Remember, the average American supermarket alone carries 70,000 items.  All of these millions of goods go through several stages of production.  Along the way, each of these producer goods that turn higher order goods into lower goods has its demand imputed back through the prices system.  Since they are not exchanged, they won't have any prices either.

So let's say the planners got lucky (or are as brilliant as you expect them to be) and they correctly determined the market demand for 50" LCD TV's would be 300,000 households exactly.  (And when you consider that in your proposition they'd have to get the demand close to perfect for every product available and adjust it whenever tastes change - which is all the time, it's seems highly unlikely.)

The sale of the LCD TV's garnered $150,000,000 at $500 a piece.  Was that a wise use of resources?  They don't know.  Again, they don't know what it costs to produce the TV's.  What if it costs twice that?  What if it costs half?  They have no idea.

Again, there are like blind men in the wilderness.

David in Qatar

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#37) On May 04, 2010 at 10:38 PM, whereaminow (73.77) wrote:

nzsvz9,

Those are all great points. If you haven't read Hayek's Pretense of Knowledge, I think you would really enjoy it.

Another thing that central planners have difficult with is implementing quality controls.  Quality controls require risk assessments that are both quantitative and qualitative. 

In the Soviet Union, the chandelier industry under Kruschev got into a lot of trouble, because they were using materials that were too heavy.  The chandeliers were pulling down the roofs of the Party members' daschas on the Black Sea, killing Party Comrades. But the Soviets had no way to implement quality controls and meet production targets. 

David in Qatar

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#38) On May 05, 2010 at 4:59 AM, devoish (98.76) wrote:

Did we leave the imaginary world of "whereyouarenow" just as I was answering?

My answer is fine.

Existing in the land of whereyouwerethen in your OP, BnL did not have to worry about conditions in the average American supermarket or did you not think I would notice when you changed the rules of your silly games.

If BnL has to concern itself with conditions in the average American supermarket then it does not have such a tremendous competitive advantage that it has driven out all competition in all areas of production.

In the imaginary world of "whereyoumightstay" it does not matter to BnL one tiny bit if BnL gets anywhere near to close to right in terms of production. Nobody else is getting any of their customers because BnL has driven out all competition in all areas of production. So nobody else has any means of producing TV's and if there are any extra TV's they can sit on the shelf for the next quarter. If the TV's are sold in the first weekend, then BnL has just passed "scarcity" on to the consuming public and BnL does not have to care.

Brilliance is not required.

In your OP you told us So there is absolutely no way that Buy N Large can make production decisions that reflect the output of a market economy - the wants and needs of consumers.

BnL does not have to worry about a market economy because it does not exist in one. Look at it from the CEO of BnL's point of view. He does not have to care if the minion named hopelesslylost has a TV or not. "Wants and needs of the consumer" mean nothing to him. Hopelesslylost cannot fire him, compete with him, or vote him out of his office. So poor, TV-less, hopelesslylost needs to live in a Democracy where he can fire the "central planners" in 2006 if they did a crummy job responding to the "wants and needs of consumers".

Of course, everywhere there is not a Democracy, there is a central planner that cannot be replaced except though violence and with all that violence costs.

Unless you have an example otherwise?

You can go on and on about Socialism in Russia (that we use to call Communism) all you want. You can extoll the virtues of a purely "free market" economy all you want. But it has never lasted a weekend in the real world. Nothing collapses more quickly than your "free market". So quickly it has never had a noticable existence in the real world. And each time it collapses, it collapses into "central planning". And the greatest opportunity and most enduring of the "centrally planned" systems are those that attempt, with varying degrees od success, to spread resources among the greatest number of citizens. Socialism was better than Feudalism. Democracy for all its faults better still.

So the real question has always been, when "free markets" inevitably collapse, what will they collapse into? Kingdoms? Socialism? Communism? Dictatorships? Democracy?

In the United States, we have built a Democracy. We voted for entitlements to protect us all from being impoverished, we voted to protect ourselves from the greed of individuals so we could go about our lives.

As we have surrendered those protections to small Gov't ideology, we are building a Plutocracy as sheep are led to fear Socialism. It will not be good for the sheep.

A top tax rate in the range of 90% will reduce the influence of the wealthy upon the elected.

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#39) On May 05, 2010 at 5:36 AM, whereaminow (73.77) wrote:

devoish,

Let's try to stay focused on the question at hand.  You have your own blogs where you can spit Marxist epithets at the free market.

Here we are talking about the Economic Calculation Problem of the Socialist Commonwealth. 

Your naivete is stunning.  It's clear that you have never considered the subject of scarcity, possibly in your entire life.  That's quite frightening.  Do you think it's a good idea for a Socialist State to produce whatever it wants and just leave the unwanted stuff on the shelves?  What about the intermediate factors of production?  Should the Planners just say "go ahead and build a bunch of microchips and if we don't use them, we'll just store them on a shelf over there?"  What about the resources and labor used up in that process that is wasted?  What else could that energy have gone to?

That's a child's answer.  It's obvious that you've never thought about the limits of what can be designed by decree. 

This is why every collectivist State ends up starving its people.  Devoish has them building things that no one needs leaving no one else to make food or shelter.  "Oh, just put those things on a shelf somewhere.  No big deal. ..... Hey, how come their is a food shortage?" 

Naive do-gooders always think they can plan the world.

So I ask you again (for the fourth time), how will the Central Planners decide what to produce and how to produce it if they don't know the costs of production?

David in Qatar

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#40) On May 05, 2010 at 11:10 AM, nzsvz9 (< 20) wrote:

David,

The central planners do not know the costs of production, and they do not care - as devoish has said. They do not need to care because there is no competition - they are a true monopoly - which is a de-facto dictatorship (the answer to devoish's question - what does the Democracy under the control of a single entity (political or economic) deteriorates into).

The central planning will be inefficient - grossly moreso than a market driven economy - for many reasons (including the economic calculation problem, lack of entrepreneurship, lack of competition as a driving force and so on). You are correct that all the intermediate decisions will not be the focus of the 'A' team (promoted for their great work) central planners - only the end goods and services. The 'B' team will do the fulfillment of the intermediate stuff down to raw materials. The call for flat screen TVs which require a new slim energy efficient chip or display segment would be an order placed from the central planner of the TVs to the 'B' team chip producer - who does not have the design to fulfill the results. Who would need a new raw material not even available ... and so on. Perhaps these could be hung from the cielings in the Black Sea daschas?

It's how you end up with giant railway spikes, crshing chandeliers, and lots of left shoes (only left shoes when the right shoe factory blows up) ... and so on.

The more insidious part in this thought experiment is that the entity is now in full control of the lives of all the citizens. Money would have no meaning, since prices would be arbitrary, wages would also be controlled, as devoish himself rightly points out the CEO of BnL "He does not have to care". Do we think the murderous leaders of the Soviet Union cared about their people? Totalitarinism is the horror here, not the mythical costs of production. You live and die at the whim of BnL - since they control everything, even you. No matter where, when, or who you are now, then or ever. "Glory be to the company!'

I do NOT want to live in a democracy - I would much prefer a constitutionally limited republic with limited government - not NO government. Not all of my fellow man (woman, and those of indeterminate gender) and their political associations (of country or other organization) would choose to live and leave me alone. Both those that will me harm, covet what little I have, or would have me worship (or not worship) a deity/entitiy/company/nothing of their choosing, or think they know better how I should live my life - they are the threat to me, my family and my liberty - which a small government bound by law - a republic - would work for me, a Citizen.

Until that time, I'll be looking for more statesmen like Ron Paul ... to vote to retain this Republic.

Known as BnL cutomer nzsvz9 - with $0.00 of credit left on his BnL VISADISCAMEXMC card.

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#41) On May 05, 2010 at 2:23 PM, FleaBagger (33.08) wrote:

Devoish has one argument that he thinks works really well. It is the same as Candide's philosophy in Voltaire's "The Optimist," namely, "Whatever is, is right."

The fact that he keeps returning to that argument despite its irrelevance to the subject at hand suggests to me that he is unable or unwilling to contribute meaningfully to the specific topic at hand. It is hilarious that he keeps accusing you of living in an imaginary world when your whole point is that such a scenario could never come to pass in the real world!

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#42) On May 05, 2010 at 6:27 PM, devoish (98.76) wrote:

Frankly gentlemen,

You claim to fear a captured democracy and wish to substitute a captured "free market". No "free market" has lasted without capture, even ten minutes.

Empty headed sheep.

David,

just because you do not like my answer, does not mean I did not give one. My answer solves your problem just fine. BnL is a corporation intended to make as much for itself as possible. It has no responsibility to provide anyone with food, and you should not expect that of it.

Elected Government on the other hand, should be expected to.

A Socialist Government should be expected to.

Dictator - no. King - no.

Free market economy - has the bar set lowest of all.

Sheep.

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#43) On May 05, 2010 at 6:47 PM, devoish (98.76) wrote:

Flea,

Both you and david have demanded real world examples from others as well as me - stable prices being a recent example.

The Real World. It is your standard as well as mine.

No "free markets".

America is not perfect, not even close. But that is no reason to substitute her Democracy for a plutocracy. Because you will not have a "free market" past the frst ten minutes. They do not exist for a reason.

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#44) On May 05, 2010 at 10:35 PM, whereaminow (73.77) wrote:

devoish,

At this point you are clearly lost.  You are also a fraud - criticizing our economic viewpoints when you don't even understand how scarcity works.  That's like criticizing an aerospace engineer's ideas when you don't even know what gravity is.

So stop lashing out like a child.  It is a simple question. 

Now for the fifth time, how will the Central Planners decide what to produce and how to produce it if they don't know the costs of production?

My father has a saying that applies here: "if everybody else is the Assh*le, maybe you're the Assh*le."

David in Qatar

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#45) On May 06, 2010 at 7:13 AM, devoish (98.76) wrote:

Heard your dad's quote alot, did you? 

I repeat myself, for you. 

In your imaginary world -

The cost of production no longer matters, the demand for product does

In fact, demand drives production in the real world too.

The cost of production only drives the price of the product, or after you add a "central planner who fixes price points" to the world you created in the OP, the profitability to the company of the product. Customers drive demand. Ask the Home Builders. In 2008, no customers, no demand, no production. In 2005, lots of customers, lots of demand, lots of production.

The fact that those customers were created by the financial industry is irrelevant to the point.

To simplfiy, a company has to do two main things when it embarks on a project.  First, it must attempt to anticipate future prices for the goods it plans to produce.  Second, it has to determine the costs of producing those goods

And the first thing should be, it must attempt to anticipate future demand  for the goods it plans to produce. For some goods there is no demand at any price.

Of course any company with costs, will know what those costs are. With or without exchange from a competitor, it has exchange with its workers. A bowl of gruel and a whipping in exchange for one days work, for example.

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#46) On May 06, 2010 at 9:50 AM, whereaminow (73.77) wrote:

devoish,

A bowl of gruel and a whipping in exchange for one days work, for example. 

I think you are finally starting to get it.  I'm very excited about this.

BnL is an analogy but the idea that a monopolistic entity can direct all resources is not "make-believe."  It is Socialism in its original form.  From Fourier to Owen to Saint-Simon to Marx to Alinsky, Socialism has a few running ideas:

1. A hatred of private property and the goal of abolishing it.
2. Collectivization of the means of production in the hands of a monopolistic entity, the State.
3. Equalization of incomes for the workers.
4. Harsh discipline for those who do not go along for the ride.

And in the real world, a bowl of gruel and whipping was what the Soviet laborers received in exchange for their work.  Money had no value since the labor tickets couldn't buy anything (finished goods were a rarity), and the labor itself was not exchanged in a competitive market so nobody knew the value of an engineer, for example.

Soviet joke:

"They pretend they are paying us and we pretend we are working."

So are you starting to see what a Socialist economy is impossible?  It's certainly possible that someone can beat you with a stick for 70 years, but it won't produce a rational allocation of goods and services.

David in Qatar

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#47) On May 07, 2010 at 6:36 AM, devoish (98.76) wrote:

I am glad for your enthusiasm.

Have we agreed that deciding how or what to produce is driven by demand?

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#48) On May 07, 2010 at 8:38 AM, whereaminow (73.77) wrote:

devoish,

Your focus is on finished goods. 

Anything beyond a Crusoe level economy requires a unitary measure to determine the demand of a finished good, and intermediate goods used to make finished goods, and higher order goods used to make intermediate goods.

The stages of production that go from pulling something out of the ground and turning it into a finished product can be understood in the essay I, Pencil.  Just a simple pencil requires many stages of production.

Take away the private property used in production, and you take away exchange.  Which means you take away the knowledge of what it costs to produce that pencil.  And you take away the knowledge of what it costs to use those factors of production to make something else.

You can know the demand for a finished good.  It doesn't matter.  Getting from pulling it out of the ground to the consumer is impossible without economic calculation.

"One may anticipate the nature of the future socialist society," Mises said seventy years before the rest of the world was to become convinced. "There will be hundreds and thousands of factories in operation. Very few of these will be producing wares ready for use; in the majority of cases what will be manufactured will be unfinished goods and production goods… Every good will go through a whole series of stages before it is ready for use. In the ceaseless toil and moil of this process, however, the administration will be without any means of testing their bearings."

From my life and study in Moscow, I can attest to the truth of this prediction. In an economy, nearly every consumption good requires several stages of production. The more natural resources used and the more complex the technology involved, the more stages of production are required. Yet lacking an ability to see a production process through to ends that consumers desire, Soviet socialism produced only military hardware, useless goods, goods to make other goods, while consumers were deprived of bare essentials. (The Decline and Fall of Gorbachev and the Soviet State - Yuri N. Maltsev - Mises Institute)

David in Qatar

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#49) On May 07, 2010 at 1:29 PM, mattdaddy21 (< 20) wrote:

A free market would be my personal utopia.  I'm afraid though that if any of the participants in this market are human, that possibility will never occur.

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#50) On May 08, 2010 at 5:32 PM, 1315623493 wrote:

"The market economy, free or hampered by interventionism, has never made the rivers run blood red.  That alone is enough motivation to support it."

---------------------------------------------------------------------------------------

That's like saying a transportation system without traffic cops won't result in more dangerous roads. After all, when a cop pulls you over for speeding, they are interfering with your freedom to drive as fast as you want.

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#51) On May 09, 2010 at 1:13 AM, whereaminow (73.77) wrote:

BetapegLLC,

Why do you assume that private roads wouldn't have speed limits and traffic lights?

The Privatization of Roads and Highways (pdf)

Do you dispute the historical record that collectivist societies have caused the rivers to run blood red?

Can you explain how socialist economies could possibly function without knowing their costs of production?

David in Qatar

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#52) On May 09, 2010 at 5:02 AM, 1315623493 wrote:

whereaminow,

Why do you assume that private roads wouldn't have speed limits and traffic lights? 

Because corporations don't make and enforce laws. 

Do you dispute the historical record that collectivist societies have caused the rivers to run blood red?

I acknowledge the idiocy of total government control of everything. I also acknowledge the idiocy of total absence of government control. Just because there have been awful examples of socialism gone bad does not negate the numerous examples of it functioning properly, albeit never perfectly, because no system is perfect. 

Can you explain how socialist economies could possibly function without knowing their costs of production?

All economies are socialist to one degree or another. Could you be more specific?

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#53) On May 09, 2010 at 6:21 AM, whereaminow (73.77) wrote:

BetapegLLC,

Because corporations don't make and enforce laws. 

Why does it have to be a corporation?  Why can't an individual with ownership rights to a road dictate the rules on his road, just as an individual dictates the rules of his household. 

Developing rules for the use of private property is a function of the property owner.  Contracts that stipulate those rules bind the owner and customer in agreement.  The role of enforcement lies upon the outside agency, whether that is government in our society, or competiting agencies in a free society.

All economies are socialist to one degree or another. Could you be more specific?

Collective ownership of the means of production - the focus of the proof in the post.

David in Qatar

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#54) On May 09, 2010 at 2:39 PM, 1315623493 wrote:

Why does it have to be a corporation?

We assume that's what fills the void of government.

Why can't an individual with ownership rights to a road dictate the rules on his road, just as an individual dictates the rules of his household. 

Corporations ARE individuals. They can make rules but they can not enforce them.  

The role of enforcement lies upon the outside agency, whether that is government in our society, or competiting agencies in a free society. 

So you do believe in intervention? I thought the motorists could regulate themselves? 

Collective ownership of the means of production - the focus of the proof in the post. 

i.e. communism. Who here is advocating that? 

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#55) On May 09, 2010 at 7:38 PM, lucas1985 (< 20) wrote:

@whereaminow,
"Mises himself was barred from teaching in America, land of the free and the greatest market economy of his day, because of his economic theory."
What are your thoughts on the persecution and attempts of censorship made at Keynesian economists?
"A member of Stanford's economics faculty from 1946 to 1971, Tarshis became controversial at Stanford and elsewhere following the 1947 publication of the textbook The Elements of Economics.
Conservative Stanford alumni who disliked the ideas of British economist John Maynard Keynes tried to get Tarshis fired from Stanford, said Tibor Scitovsky, a Stanford professor emeritus of economics who was Tarshis' colleague here.
Tarshis had studied under Keynes at Cambridge. His textbook was "a very good book and a best-seller," Scitovsky said, "but somehow or another, very conservative people among the alumni thought that Keynes was some kind of revolutionary, and, of course, he was, in economics, but they thought he was subversive as well. President Tresidder was under some pressure to get rid of [Tarshis], which he correctly withstood.
(...)
 The controversy surrounding Tarshis began in August 1947, when the National Economic Council published an essay saying that The Elements of Economics "plays upon fear, shame, pity, greed, idealism, hope. . . . This is not an economics text at all; it is a pagan-religious and political tract."
Merwin K. Hart, president of the council, wrote to Tresidder that Tarshis was "drilling" at the foundations of America's greatness. Others, including newspaper publishers and at least one congressman, wrote to Stanford alumnus Herbert Hoover and other members of the Board of Trustees protesting the book." [1]

"For 90 years, it has either been ignored or dismissed by academic economists"
Ohh, those mean/greedy/State-worshippers academic economists so ignorant of the Truth. You talk of the economic problem as if this is a settled matter. I've got bad news for you.

"who have longed for the day when their State masters will ask them to centrally plan the glorious new world economy"
Yeah, Bryan Caplan is eager to plan the world economy:
"Ever since Mises, Austrians have overused the economic calculation argument. In the absence of detailed empirical evidence showing that this particular problem is the most important one, it is just another argument out of hundreds on the list of arguments against socialism. How do we know that the problem of work effort, or innovation, or the underground economy, or any number of other problems were not more important than the calculation problem?
The collapse of Communism has led Austrians to loudly proclaim that "Mises was right." Yes, he was right that socialism was a terrible economic system - and only the collapse of Communism has shown us how bad it really was. However, current events do nothing to show that economic calculation was the insuperable difficulty of socialist economies. There is no natural experiment of a socialist economy that suffered solely from its lack of economic calculation. Thus, economic history as well as pure economic theory fails to establish that the economic calculation problem was a severe challenge for socialism" [2]

"Do you dispute the historical record that collectivist societies have caused the rivers to run blood red?"
Do you dispute the historical record which says that free-markets were often imposed at gunpoint?

Why it's so difficult for you to keep an air-tight logic and provide abundant, rigorous empirical evidence when making arguments of any kind?

1- Obituary of Lorie Tarshis. Stanford News Service.
2- Why I Am Not an Austrian Economist. Essay by Bryan Caplan.

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#56) On May 09, 2010 at 10:45 PM, whereaminow (73.77) wrote:

lucas1985,

Have you read Caplan's essay? Because I have. And since you've linked to criticisms of Mises' proof, I'm sure you can answer the question:

How will the central plans decide what to produce if they don't know their costs of production?

(Note that I have now asked this question 7 times in this blog and have yet to receive a meaningful repsonse.)

David in Qatar

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#57) On May 09, 2010 at 10:46 PM, whereaminow (73.77) wrote:

lucas1985,

You link to that book but I don't think you've read it.  Give me one example of a free market imposed at gunpoint.

David in Qatar

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#58) On May 09, 2010 at 10:54 PM, whereaminow (73.77) wrote:

Betapeg,

Socialism is an economic system in which the collective owns the means of production.  Communism is a form of Socialism, not a separate idea.  Market Socialism, likewise, is a form of Socialism.  As is Marxism, Fabianism, Keynesianism, Environmentalism, etc.

Socialism can trace its origins to Plato's Republic, through More's Utopia, to the crazy Fourier and Saint-Simon, to LaSalle and Marx and Lenin, to the Fabians like Shaw and Wells, etc.

So you do believe in intervention? I thought the motorists could regulate themselves? 

No, god, you are so completely clueless about Libertarianism.  No wonder you write such trash about us.  You've never studied.

It's called a book. It has pages.  On the pages are words.  You read the words left to right, top to bottom.  They form sentences and sentences form paragraphs.  You should try it sometime.

Private property regulates human behavior in a libertarian society. In fact, it regulates all behavior in our world, except the behavior of theives (we just happen to disagree about who the thieves really are.)  I would post the Liberty for Dummies link again but it's probably over your head.

David in Qatar

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#59) On May 09, 2010 at 11:01 PM, whereaminow (73.77) wrote:

Finally, here are my two cents on Caplan and then some rebuttals from professionals:

Caplan still hasn't answered the question I posed and Mises posed 90 years ago.  Yes, the USSR lasted 70 years, but Mises already answered that objection in 1922, when he wrote Socialism.  That's when he noted that after War Communism, the Soviets were operating like a horribly inefficient Post Office in a Capitalist country.  They had costs they could calculate, but they were based on scarcity factors present in other societies.  Still, it was better than nothing.  I don't think Caplan studies very hard.  He certainly does not answer Mises' fundamental objection.

Here are some professional objections to Caplan:

http://blog.mises.org/841/caplan-and-responses/

Now, lucas1985, we really want to know what YOU think about all this.

David in Qatar

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#60) On May 10, 2010 at 12:01 AM, 1315623493 wrote:

whereaminow

Socialism is an economic system in which the collective owns the means of production.  Communism is a form of Socialism, not a separate idea.  Market Socialism, likewise, is a form of Socialism.  As is Marxism, Fabianism, Keynesianism, Environmentalism, etc. Socialism can trace its origins to Plato's Republic, through More's Utopia, to the crazy Fourier and Saint-Simon, to LaSalle and Marx and Lenin, to the Fabians like Shaw and Wells, etc. 

What you're failing to recognize is the degree to which any one economy is socialist or capitalist. Not even Hong Kong can be said to be 100% capitalist. Yea, total government control of the mean of production isn't such a good idea, but neither is total absence of government from all means of production.

---------------------------------------------------------------------

No, god, you are so completely clueless about Libertarianism.  No wonder you write such trash about us.  You've never studied.

I'm sorry, you said no intervention. Did you mean something else? 

--------------------------------------------------------------------------------- 

It's called a book. It has pages.  On the pages are words.  You read the words left to right, top to bottom.  They form sentences and sentences form paragraphs.  You should try it sometime. 

If only I read 1000 of pages of Mises, I would be just like you! LOL...I'm not going to stoop to pathetic ad hominems.

---------------------------------------------------------------------------------- 

Private property regulates human behavior in a libertarian society. In fact, it regulates all behavior in our world, except the behavior of theives (we just happen to disagree about who the thieves really are.) 

I love private property as do most. The point of contention is to what degree is government involvement in the economy necessitated. I for one, don't believe there is such thing as a truly 'libertarian society', because such a society would be analogous to anarchy.

--------------------------------------------------------------------- 

I would post the Liberty for Dummies link again but it's probably over your head. 

You're doing a great job winning me over champ. Keep it up! ;-)

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#61) On May 10, 2010 at 12:18 AM, whereaminow (73.77) wrote:

Beta,

You made it clear from the beginning that you are an enemy of libertarianism.  I have no interest in winning you over.  I'd rather watch a monkey fornicate with a football.

You are right that mixed economies rule this world.  What approach should economics take in determining the validity of economic ideas and policies?

David in Qatar

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#62) On May 10, 2010 at 1:11 AM, lucas1985 (< 20) wrote:

@whereaminow,
"Have you read Caplan's essay?"
Yes. So?

"How will the central plans decide what to produce if they don't know their costs of production?"
I'm not qualified to answer that since I'm not an economist* and, frankly, I don't care since the global economy is not centrally planned (with the obvious exceptions of Cuba, North Korea and others) and won't be centrally planned for the foreseeable future.

"You link to that book but I don't think you've read it."
It's on my (long) reading list.
 
"Give me one example of a free market imposed at gunpoint."
I'll give you 2 examples:
- Chilean coup d'état of 1973.
- Argentina's Dirty War.

"Communism is a form of Socialism, not a separate idea."
Ignorance shows again.

"As is Marxism, Fabianism, Keynesianism, Environmentalism"
And again. What's environmentalism? What's Keynesianism?

"I don't think Caplan studies very hard."
How do you know?

"Now, lucas1985, we really want to know what YOU think about all this."
I've got nothing interesting or thoughtful to say. I don't have the education and the training required to make an educated argument. Given what the Austrians say about other things I think that it's highly unlikely that they're onto something here.

* My knowledge of economics is limited to Econ 101, a bit of macro and history, finance/accounting (partly self-taught) and reading the classics (The Wealth Of Nations, Das Capital, GT and so on)

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#63) On May 10, 2010 at 1:12 AM, 1315623493 wrote:

You made it clear from the beginning that you are an enemy of libertarianism.  I have no interest in winning you over.  I'd rather watch a monkey fornicate with a football. 

I am not an enemy of moderate Libertarianism. I am an enemy of radicals who adhere to any ideology, Libertarianism included. It's a shame the movement is essentially full of tax cheats and anti-government conspiracy theorists. At least here in America. I don't take extremes and I don't believe in absolutes. Libertarianism has many great ideas and many stupid ones. I just detest those who proclaim with absolute authority the rightness of their ideology in pure form over all else. After all, Libertarianism taken to its full conclusion is essentially anarchy. Anarcho-capitalism rings a bell.

----------------------------------------------------------

You are right that mixed economies rule this world.  What approach should economics take in determining the validity of economic ideas and policies?

That is forever an open question. I won't adhere to any one philosophy but moderation of all philosophies combined in the most beneficial way achievable. I look up to the Scandinavian-style socio-economy model as desirable but still wonder whether such a model is possible in America. In a nutshell, I want free markets with government control of a select few public goods, and regulations preventing any one sector of the economy from destroying it as a whole, i.e. financial sector.

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#64) On May 10, 2010 at 1:17 AM, lucas1985 (< 20) wrote:

Links:
- Chilean coup d'état of 1973.
- Argentina's Dirty War.

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#65) On May 10, 2010 at 2:37 AM, lucas1985 (< 20) wrote:

@BetapegLLC,
"I am not an enemy of moderate Libertarianism"
I'm not an enemy of pragmatic libertarians* either. I'm an enemy of kooks, ideologues, quacks, warmongers, know-nothing, cultists, sectarians, theocrats, authoritarians, conspiracy nuts, crackpots, racists, etc. Oops, I've just described Ron Paul (excepting the bit about warmongering)

"I just detest those who proclaim with absolute authority the rightness of their ideology in pure form over all else."
Some people see extreme libertarianism as the Marxism of the right.

"I look up to the Scandinavian-style socio-economy model as desirable but still wonder whether such a model is possible"
Yeah, I view Scandinavia as some sort of utopia too. But I've got nothing against Switzerland or Singapore.

"In a nutshell, I want free markets with government control of a select few public goods, and regulations preventing any one sector of the economy from destroying it as a whole, i.e. financial sector."
You'll be accused of being a technocrat.
BTW, check this essay by a classical liberal.

* It's wise to check the true beliefs of pragmatic libertarians because a significant minority of them are warmongers, social/cultural conservatives or market fundamentalists in disguise.

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#66) On May 10, 2010 at 3:36 AM, whereaminow (73.77) wrote:

Chilean coup d'etat straight from the link:

The US-backed[1] military junta took control of the government, composed of the heads of the Air Force, Navy, Carabineros (police force) and the Army led by General Augusto Pinochet.[2] General Pinochet assumed power and ended Allende's democratically elected Popular Unity government.

So... how is this an example of free markets?  US military? Military coup? Hmmmm......

Next up the Dirty War:

The Dirty War (Spanish: Guerra Sucia) refers to the state-sponsored violence in Argentina against several thousand left-wing militants,

Again, "state-sponsored violence"...... Hmmmmm

I think you associate anything that is not Left Wing government as "Free Market".  Right wing government is not the free market.  The ABSENCE of government is the free market.

David in Qatar

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#67) On May 10, 2010 at 3:43 AM, whereaminow (73.77) wrote:

lucas1985,

I'm not qualified to answer that since I'm not an economist* and, frankly, I don't care since the global economy is not centrally planned (with the obvious exceptions of Cuba, North Korea and others) and won't be centrally planned for the foreseeable future.

If you frankly don't care, then why are you on this post, since that is what we are discussing here?   

You shouldn't sell yourself short.  You are capable of independent thought.  Take the time to study the argument and decide for yourself.  Accepting what trained economists say is "truth" without study, is exactly the same as rejecting this argument without study. 

You can do it, lucas.

David in Qatar

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#68) On May 10, 2010 at 3:47 AM, whereaminow (73.77) wrote:

BetapegLLC,

I am not an enemy of moderate Libertarianism. I am an enemy of radicals who adhere to any ideology, Libertarianism included. It's a shame the movement is essentially full of tax cheats and anti-government conspiracy theorists. At least here in America. I don't take extremes and I don't believe in absolutes. Libertarianism has many great ideas and many stupid ones. I just detest those who proclaim with absolute authority the rightness of their ideology in pure form over all else. After all, Libertarianism taken to its full conclusion is essentially anarchy. Anarcho-capitalism rings a bell.

I want you to take a minute, read what you wrote here, and say aloud, "I just took an extremist position against extremism."

Simply pointing out that many libertarians have come to the conclusion of anarcho-capitalism is not a damnation of either libertarianism nor anarcho-capitalism.

David in Qatar

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#69) On May 10, 2010 at 8:33 PM, 1315623493 wrote:

I want you to take a minute, read what you wrote here, and say aloud, "I just took an extremist position against extremism."

Glad you admit it. Given that, what makes you any different from a communist? After all, you've taken the opposite end of the spectrum, far from center. I'd have to imagine David in Qater being given power. I would expect you to get rid of all leftists, either imprisoned, executed, or exiled, in order to realize your Libertarian dream. So much for Liberty. So goes the way of an extremist anything. 

Simply pointing out that many libertarians have come to the conclusion of anarcho-capitalism is not a damnation of either libertarianism nor anarcho-capitalism.

That's like saying, "Simply pointing out that many socialists have come to the conclusion of communism is not a damnation of either socialism nor communism." So what makes you or your anarcho-capitalist friends any different from a communist?

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#70) On May 11, 2010 at 2:06 AM, whereaminow (73.77) wrote:

BetapegLLC,

I happily take an etremist position against murder and theft. Those are the functions of the State.

However since you can't define libertarianism or the Non-Aggression Principle, nor explain why it is flawed in any form (moderate or extreme), your opinion has little value, not just to me but to anyone.

If you can't tell the difference between libertarianism and communism..... oh.... like say...... how property rights are handled......as just an example...... well, what's the point of continuing this discussion?  I'm not here to be Betapeg's teacher.  The information is a mouse click away.  Look it up yourself.  You're just being lazy.  Are you a civil servant, by chance?  On the government dime in any way?  Only government employees are that freaking lazy and incompetent.

David in Qatar

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#71) On May 11, 2010 at 2:42 AM, 1315623493 wrote:

I happily take an etremist position against murder and theft. Those are the functions of the State.

Which is why I asked what makes you any different from a communist? Anarchy is just as bad as an oppressive state.

However since you can't define libertarianism or the Non-Aggression Principle, nor explain why it is flawed in any form (moderate or extreme), your opinion has little value, not just to me but to anyone.

More elitist drivel. Nice work. 

If you can't tell the difference between libertarianism and communism..... oh.... like say...... how property rights are handled......as just an example...... well, what's the point of continuing this discussion? 

Apparently you didn't get anything I have been saying. You are essentially admitting your anarchist tendencies. So I am going to ask you, what makes you different from someone who think the state should own everything, as you believe the state show own nothing. Your entire philosophy is absolutist while mine is relativist. The hallmark of any extremist view. And no different in its absurdity than Stalinist Communism. 

I'm not here to be Betapeg's teacher. The information is a mouse click away.  Look it up yourself. You're just being lazy.

So if I read enough of the Bible, I'll become a Christian too? I'v read plenty of Libertarian literature, but fortunately, I develop my own critically thought out philosophical viewpoints. Perhaps you could give it a try too.

Are you a civil servant, by chance?  On the government dime in any way?  Only government employees are that freaking lazy and incompetent. 

No, I am an entrepreneur who realizes the benefits of a balanced system of capitalism and government, apart from anarchy or an oppressive state apparatus.

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#72) On May 11, 2010 at 3:19 AM, whereaminow (73.77) wrote:

Which is why I asked what makes you any different from a communist? Anarchy is just as bad as an oppressive state.

Taking an extremist position against murder and theft makes you as bad as an oppressive state?  Reallly?  No.. really? 

More elitist drivel. Nice work. 

Don't redirect your anger.  You can't define libertarianism or the NAP. Until you can, how can you criticize it?  You have to understand something to have an effective criticism. Otherwise it's a strawman.

Apparently you didn't get anything I have been saying. You are essentially admitting your anarchist tendencies. So I am going to ask you, what makes you different from someone who think the state should own everything, as you believe the state show own nothing. Your entire philosophy is absolutist while mine is relativist. The hallmark of any extremist view. And no different in its absurdity than Stalinist Communism. 

I'm proud to be an Anarchist.  I enjoy the company of other Anarchists.  Jeffrey Tucker, Tom Woods, Lew Rockwell, Doug Casey, et. al are some of the most thoughtful and insightful people that I have ever known.  I am very happy to be included in their company. 

As for my beliefs, again you are wrong.  You see what you want to see.  The State can own whatever it wants, provided that it comes by that ownership legitimately.  Theft and murder are not legitimate means to ownership.  Unfortunately, those are the State's preferred tools for acquisition.  Collective ownership is perfectly fine.  Do it all you want.  Just don't steal and kill others or force others to be a part of your system.

(Again, the whole extremist position against theft and murder.)

Are you a relativist on the subject of murder?  Do you partake in it from time to time, when it suits you?

So if I read enough of the Bible, I'll become a Christian too? I'v read plenty of Libertarian literature, but fortunately, I develop my own critically thought out philosophical viewpoints. Perhaps you could give it a try too.

I don't care whether you come to believe in it.  I enjoy making fun of your nonsense either way.  The banter here is fun, otherwise I wouldn't be engaging in it.  I'm simply pointing out that my job isn't to take you by the hand like a child.  If you really want to know what Libertarianism is all about, you could actually read it.  You haven't.  That's obvious to everyone here except you.  

No, I am an entrepreneur who realizes the benefits of a balanced system of capitalism and government, apart from anarchy or an oppressive state apparatus.

Wait.... we don't have an oppressive state apparatus?  Millions of Americans disagree with you.  They're probably just imaging things though.

Have the last word.  I have to move on.

David in Qatar

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#73) On May 11, 2010 at 4:16 AM, 1315623493 wrote:

Taking an extremist position against murder and theft makes you as bad as an oppressive state?  Reallly?  No.. really? 

You have far too much faith in individuals.

Don't redirect your anger.  You can't define libertarianism or the NAP. Until you can, how can you criticize it?  You have to understand something to have an effective criticism. Otherwise it's a strawman.

I completely understand Libertarianism. You're argument here to just declare outright your perception of my apparent ignorance of the subject. How many pages of Mises do I have to read before I'm allowed to critique your Messiah?

I'm proud to be an Anarchist.  I enjoy the company of other Anarchists.  Jeffrey Tucker, Tom Woods, Lew Rockwell, Doug Casey, et. al are some of the most thoughtful and insightful people that I have ever known.  I am very happy to be included in their company. 

You are happy to be on the political fringe?

As for my beliefs, again you are wrong.  You see what you want to see.  The State can own whatever it wants, provided that it comes by that ownership legitimately.  Theft and murder are not legitimate means to ownership.  Unfortunately, those are the State's preferred tools for acquisition.  Collective ownership is perfectly fine.  Do it all you want.  Just don't steal and kill others or force others to be a part of your system.

For example? 

(Again, the whole extremist position against theft and murder.) Are you a relativist on the subject of murder?  Do you partake in it from time to time, when it suits you? 

The state isn't executing Wall Street traders and nationalizing investment banks. 

I don't care whether you come to believe in it.  I enjoy making fun of your nonsense either way.  The banter here is fun, otherwise I wouldn't be engaging in it.  I'm simply pointing out that my job isn't to take you by the hand like a child.  If you really want to know what Libertarianism is all about, you could actually read it.  You haven't.  That's obvious to everyone here except you.   

I know what it's all about. Your absolutist disregard of anyone who dares question it really speaks to the empty rhetoric behind your ideology. Your absolutism is borderline religious in nature which is scary. A little pragmatism wouldn't hurt.

Wait.... we don't have an oppressive state apparatus?  Millions of Americans disagree with you.  They're probably just imaging things though.

Tell me, and you can ask those Americans too, what freedoms have we lost? I'm dying to know how my government is oppressing me! Those same Americans, (i.e. Tea Party) don't even know Obama passed the largest tax cut in American history. For them, facts are irrelevant.

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#74) On April 28, 2011 at 6:12 PM, mtf00l (48.59) wrote:

Thanks guys,...this thread has kept me occupied all afternoon! =D

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