HB is one of my favorite investors and individual philosophers, but he essentially commits the fallacy of composition when he assumes that when people individually all seek their own individual best-interests... will result in the most overall happiness.
[/quote]
Happiness is subjective, but in the economic sphere this is called capitalism. To paraphrase Churchill, it is the worst economic system for achieving prosperity, except for all the others that have been tried. In other words, "Let those who say it can't be done get out of the way of those who are doing it." Works for me...
Well, looks like today all PPers have no reason to hide! Yeah! Good to see gold get bid for a couple days in a row, seems very rare in the past few years.
Ad Orientem wrote:
Stating that government never works is just silly.
Have you read Why Government Doesn't Work by HB?
I believe HB would respond: please give a single example of a government program that works well.
If the government didn't operate traffic signals, I believe my 30 min commute today would've been like 3 hours with uncontrolled intersections. I do not believe organizations would voluntarily and charitably spring up spontaneously to handle this work. Also sewers, clean water, these are nice things. It could be better, but our food is relatively safe... safer than China, though much less delicious. All of these attributes are conspicuously absent in the third world, or countries headed toward that status, like Greece or Venezuela, where tax evasion is also rampant.
It's clear that government can work, but it depends on how you define "work."
If you mean "accomplishes staled goals," then plenty of government programs work (and an embarrassing number don't).
If you mean "accomplishes stated goals within the bounds of common moral standards," then fewer government programs work, but there are still a bunch.
If you mean "accomplishes stated goals within the bounds of common moral standards and has no negative side effects that are as bad or worse than the solved problem," then we're getting into the realm where the examples of success are rarer.
If you mean "accomplishes stated goals within the bounds of common moral standards and has no negative side effects that are as bad or worse than the solved problem and systematically incentivizes improvement over time", then maybe there are one or two, but it's doubtful. This is the most common category that market transactions fall into, coincidentally.
If you mean "accomplishes stated goals within the bounds of common moral standards and has no negative side effects that are as bad or worse than the solved problem and systematically incentivizes improvement over time and is the most economically efficient way to solve the problem," then there probably aren't any examples of this. This is how the best marketplace transactions could be described.
IMHO It's really not so much that government can't work, but more than government works less reliably than most alternatives, and usually with higher cost, more wasteful expenditure of resources, and more morally objectionable side effects then those alternative would be and are in the cases where they're permitted.
Human behavior is economic behavior. The particulars may vary, but competition for limited resources remains a constant.
- CEO Nwabudike Morgan
Ad Orientem wrote:
Stating that government never works is just silly.
Have you read Why Government Doesn't Work by HB?
I believe HB would respond: please give a single example of a government program that works well.
If the government didn't operate traffic signals, I believe my 30 min commute today would've been like 3 hours with uncontrolled intersections. I do not believe organizations would voluntarily and charitably spring up spontaneously to handle this work. Also sewers, clean water, these are nice things. It could be better, but our food is relatively safe... safer than China, though much less delicious. All of these attributes are conspicuously absent in the third world, or countries headed toward that status, like Greece or Venezuela, where tax evasion is also rampant.
The classic argument is that private road operators would install traffic signals (to beat their competitor road operators with no signals). Of course having all these competing but independent road operators would be super inefficient.
dragoncar wrote:
The classic argument is that private road operators would install traffic signals (to beat their competitor road operators with no signals). Of course having all these competing but independent road operators would be super inefficient.
Not at all. Competition is the process by which efficiency is discovered in the first place. Of course it would be the most efficient to have one single monopoly provider that did everything perfectly, but without a competitive market, there is no means by which the most efficient process is ever discovered, and even if it was, with no market, the single monopolist would abuse its position and exploit people.
Human behavior is economic behavior. The particulars may vary, but competition for limited resources remains a constant.
- CEO Nwabudike Morgan
I know we are getting off the original topic, but a couple things come to mind.
--Bureaucrats moan depending on left or right on cutting spending or increasing spending for different programs. For example, the Amtrak derailment, caused increasing or decreasing funding for Amtrak to come to the forefront. In the range of single billion up or down! Why/how can these amounts of spending possibly be a concern when $85 billion was used per month during QE? I am sure someone will explain to me it's not the same, not really "real" money, etc. I just found the magnitudes interesting. Social Security payouts per month are recently $72B a month. What am I missing? Seems that $85B could have been put to amazingly better use.
--As an engineer, we were talking about this positive train control being discussed and some outrageous cost mentioned for it. I know it is simplistic, but with a smartphone with mapping/GPS or a Garmin system, an interface to the throttle of the train and I could have a working system to control train speed in production probably for less than $100k. What am I missing?
To your first question, QE is not adding net new assets to the economy, while deficit spending is. That's why you'll see a collective shrug out of most people here when the Fed "prints money," because taken in full macro-economic context, it's really not doing much of anything. It's giving people one form of fiat paper for another one.
(I've been waiting for MR principles to start getting debated again!!)
"Men did not make the earth. It is the value of the improvements only, and not the earth itself, that is individual property. Every proprietor owes to the community a ground rent for the land which he holds."
I think I understand, but then why were so many intelligent well schooled pundits/commentators, etc. so firmly convinced that QE was going to cause inflation, or even hyperinflation? It obviously didn't, or at least not immediately.
I think I understand, but then why were so many intelligent well schooled pundits/commentators, etc. so firmly convinced that QE was going to cause inflation, or even hyperinflation? It obviously didn't, or at least not immediately.
MR?
If they were all wrong, then I guess that calls into question just how intelligent and well-schooled they were, eh?
If any given financial commentator was right, why would they be doing commentary instead of putting their money where there mouths were and buying assets that would profit from this predicted hyperinflation? I'll bet that very few of these guys decided to put 100% of their assets into gold and TIPS and the like. That should tell you how much faith they had in their own predictions. Their yapping is just noise; ignore it.
Human behavior is economic behavior. The particulars may vary, but competition for limited resources remains a constant.
- CEO Nwabudike Morgan
MR = Monetary Realism. It's a school of thought around money trying to describe how our fiat currency system actually works. Personally, I find some of the lessons and explanations within MMT (Modern Monetary Theory) to be easier to digest earlier on in my "how the f'k does our monetary system work" days, but MR is 1) technically more correct on how the operations actually work, and 2) not nearly as heavy handed with regards to policy prescriptions. MR & MMT have some Keynesian-esque foundations along with what I'd argue is a few "Austrian" economic foundations (production is SUPER important).
Those pundits, while perhaps intelligent on micro-finance, are pretty lacking when it comes to macro-economics. A lot them follow deficit-hawkery that is tied into monetarism and Austrian economic philosophies.
"Men did not make the earth. It is the value of the improvements only, and not the earth itself, that is individual property. Every proprietor owes to the community a ground rent for the land which he holds."
MR = Monetary Realism. It's a school of thought around money trying to describe how our fiat currency system actually works. Personally, I find some of the lessons and explanations within MMT (Modern Monetary Theory) to be easier to digest earlier on in my "how the f'k does our monetary system work" days, but MR is 1) technically more correct on how the operations actually work, and 2) not nearly as heavy handed with regards to policy prescriptions. MR & MMT have some Keynesian-esque foundations along with what I'd argue is a few "Austrian" economic foundations (production is SUPER important).
Those pundits, while perhaps intelligent on micro-finance, are pretty lacking when it comes to macro-economics. A lot them follow deficit-hawkery that is tied into monetarism and Austrian economic philosophies.
To expand on the Monetary Realism stuff, if you are interested...
A fellow named Cullen Roche has developed this school of thought. He maintains a couple of different websites:
He's not the greatest writer, but he's worked really hard at explaining the operational realities of the monetary system.
We used to have many thread here discussing these issues.
Is the plural of thread "thread"?
"Men did not make the earth. It is the value of the improvements only, and not the earth itself, that is individual property. Every proprietor owes to the community a ground rent for the land which he holds."
ozzy wrote:
For those interested, here's a good 30min video on how the ecomony works, according to Ray Dalio:
The one thing that has always impressed me with Austrian Economics is the admission that nobody really knows how the economy works. There are simply too many moving parts.
Only problem is that then they turn right around and predict that we are headed off a cliff. How do they know?
ozzy wrote:
For those interested, here's a good 30min video on how the ecomony works, according to Ray Dalio:
The one thing that has always impressed me with Austrian Economics is the admission that nobody really knows how the economy works. There are simply too many moving parts.
Only problem is that then they turn right around and predict that we are headed off a cliff. How do they know?
Similar to Harry Browne, they commit the fallacy of composition. Instead of really getting into economics, and the actual study of behaviors of people, they basically say that we all are the most efficient seekers of our own best interests, and therefore the freest markets reflect the best interest of the people as a whole. Their supposed attempts at viewing history is more cherry-picking than analysis, IMO (OMG we cut spending in the 1920 recession and had an economic boom!) (OMG Weimar)
They also assume the validity of capitalist property norms in the pricing mechanism.
They have some really good ideas worth reading, but I think they fall off some cliffs that are just too high to ignore.
"Men did not make the earth. It is the value of the improvements only, and not the earth itself, that is individual property. Every proprietor owes to the community a ground rent for the land which he holds."
moda0306 wrote:
Similar to Harry Browne, they commit the fallacy of composition. Instead of really getting into economics, and the actual study of behaviors of people, they basically say that we all are the most efficient seekers of our own best interests, and therefore the freest markets reflect the best interest of the people as a whole.
IMO HB says that government intervention can't be desirable to the people as a whole unless it improves upon a free market system. Then he gives example after example of how it does just the opposite. I don't see a fallacy there.
In a world of ever-increasing financial intangibility and government imposition, I tend to expect otherwise.
Ad Orientem wrote:
Stating that government never works is just silly.
Have you read Why Government Doesn't Work by HB?
I believe HB would respond: please give a single example of a government program that works well.
If the government didn't operate traffic signals, I believe my 30 min commute today would've been like 3 hours with uncontrolled intersections. I do not believe organizations would voluntarily and charitably spring up spontaneously to handle this work. Also sewers, clean water, these are nice things. It could be better, but our food is relatively safe... safer than China, though much less delicious. All of these attributes are conspicuously absent in the third world, or countries headed toward that status, like Greece or Venezuela, where tax evasion is also rampant.
Traffic signals. How many businesses would pay to operate traffic signals if they could advertise on them during a red light? A lot, I surmise. That's just one idea and I'm sure entrepreneurs much smarter than me could come up with even better ideas.
Sewers and water. I can't think of any reason why competing private companies couldn't provide a superior service for less.
Safe food. I don't know... organics are booming, so not everyone is confident about their food here in the United States. China also regulates their food industry, so you are kinda making the argument that government doesn't work rather than disputing it there.
Third world countries regulate business as much or more as first world, save flourishing black markets, so I think that point is moot.
Last edited by Stewardship on Fri May 15, 2015 1:14 am, edited 1 time in total.
In a world of ever-increasing financial intangibility and government imposition, I tend to expect otherwise.
So my sewers are run by a private company, which is funded by a municipal district which is a very tiny lightweight layer of government. It's low cost and efficient, but it is government. It's "single payer". There are no competing companies with different sewer systems drilled into the earth vying for my individual business.
We need a place on this forum to dump threads that no longer have anything to do with the subject line. Maybe something like "Morphed Threads." I think most of what is usually referred to as hijacking is just the conversation drifting toward whatever is of interest to people. But I do like to be able to click on something and have the current discussion have at least something to do with the subject.
Cortopassi wrote:
Seem to be quite a lot of these days lately. Looks like any 2015 gains I had are now gone. Gold to the woodshed, yet again, even after another delay in rate hikes. It can't win.
Apologies for the conversation drift. I'll start a new thread if I want to discuss the different possible options for sewage
Where were we? Oh yes, treatment options for those who have trouble coping with the PP's daily volatility. SSRI's are popular. Just be cautious about the suicide risk.
In a world of ever-increasing financial intangibility and government imposition, I tend to expect otherwise.
Stewardship wrote:
Apologies for the conversation drift. I'll start a new thread if I want to discuss the different possible options for sewage
Where were we? Oh yes, treatment options for those who have trouble coping with the PP's daily volatility. SSRI's are popular. Just be cautious about the suicide risk.
Don't apologize. If we all apologized for a meandering thread, then I've got about 50 threads that got turned into monetary system debates to go back and apologize for.
"Men did not make the earth. It is the value of the improvements only, and not the earth itself, that is individual property. Every proprietor owes to the community a ground rent for the land which he holds."
