Thursday, September 4, 2014

The two branches of the American statist religion

The American statist religion seems to have two branches, both of which coalesced in the mad “progressive” Wilsonian rush into WWI: America as a “Christian” nation with a duty to “save” the world with “democracy”. Read 8 pages of “The War for Righteousness” by Richard Gamble. The declaration of war was passed on Good Friday, 1917 and that was not a coincidence.
Since then, the Democrat “progressives” have dumped the “God” part of the religion, while the Neocons have adopted a strange “dispensationalist” version where “Christians” and the USA have a duty to help Israel steal more land and induce WWIII and the “rapture”. (I have had the recent unforturnate experience of debating an entire army of Mark Levin types who “like” genocide of the Palestinians). The Neocons actually seem to believe that Obama is a liberal peacenik who simpathizes with radical Islam. They think libertarians do too, while the left “progressives” think we hate everyone (and left "progressives" sure HATE us). Both sides seem to think the US government has magical powers to cure things, but they disagree about what those magic powers are and to whom and how they should be applied. Each side insists that folks who disagree are evil and/or stupid.
Both sides are still gung-ho about imposing their religion upon everyone else and the rest of the world. When their endeavors blow up in their faces, it’s because the opposing “progressive” side (left or Neocon) just didn’t do it right.
I suspect this is the real reason why we have such trouble even defining basic terms with the statists.  This would also explain the instantaneous success of Keynesianism.  Even more troubling is the realization that with this statist religion being fundamental to the statist belief system, the statist is not going to be in the mood to hear that his life's work has been for naught. And he's really not going to be in the mood to hear that he and his belief system are basically the worst problems facing mankind. 

Saturday, August 30, 2014

Lew Rockwell understates the pathetic non-response of the statists to libertarian ideas


But if we define the term “libertarian moment” more modestly, a different conclusion emerges. No, we have not reached a point at which anything like a majority of Americans have embraced our ideas. But we have reached a point at which even mainstream sources, which in the pre-Internet age could get away with ignoring us altogether, are forced to acknowledge us, if only for purposes of dismissal and ridicule.

Hey Lew Rockwell:   They dismiss and ridicule us because they cannot begin to refute us and they are afraid to even allow our analysis into their brains.  No non-libertarian has any understanding of the non-aggression principle and no non-Austrian understands a) violent intervention vs. voluntary exchange; b) economic calculation vs mis-calculation; and/or how violent intervention results in mis-calculation. 

They are so cowardly that they will not allow the public to hear of the theory that the Great Depression was just a hangover of statist monetary policies from World War I.  Heck, the statists cannot even admit to themselves that they promote and engage in violence much less that it accounts for about 99.9% of their “policy” proposals. 

We need to get right in their face and challenge them on their cowardice. 

Friday, February 21, 2014

Mike Norman again does not understand or want to understand libertarian or Austrian concepts.

As I never tire of explaining, no non-libertarian or non-Austrian understands basic Austro-libertarian concepts or analysis and none seem to want to understand.  As a result, we should be using this to our advantage and be constantly pointing this out. For example, MMT crazy Mike Norman writes:

To anyone who thinks the "low tax" meme of the libertarians (if there even is a low tax meme) is a panacea, watch out...because what they really believe in is total deregulation, lack of government "interference" and all the free market bullshit that goes along with that (like pillaging the environment), which means that if this comes true, you will see a wildly oppressive oligarchical state that will make Russia look like Vermont.

The problem with this line of attack* is that libertarians believe in strict liability for environmental harm to the person and property of others because it violates the non-aggression principle which is basic to libertarianism.  It is never an excuse that the town "needs" a certain industry so badly that the industry can spew filth into the air and water owned and controlled by others without their consent. A society where persons and property (especially the persons and property of the most powerless) are not protected from pollution is not a libertarian society.

Further, because of the libertarian emphasis upon the strict prohibition of fraud, additional government regulation is superfluous and adds layers of unnecessary complexity.  Crimes, torts and fraudulent schemes are already prohibited.  As everyone should know,most government regulations exist to provide crony capitalist advantages to the elite. Indeed, crony capitalist control of the government is a constant presence on the Mike Norman website. 

Finally, the suggestion that the elite seeks laissez faire is preposterous.  The elite always seeks government subsidies and government protection.  Apparently, Norman is unable to distinguish between laissez faire and crony capitalism.  Of course, 99.999% of interventionists are congentally unable to make that simple differentiation.  Thus, no libertarian should ever act surprised that this is the case.

I again make the point that we should be constantly noting for the public that our opponents will not engage us on the merits of our ideas or analysis.  Our opponents wish to suppress our ideas because they sense they would lose a debate where our ideas are freely discussed and effectively explained.

*What does Norman mean by "(if there even is a low tax meme)"?  That we are hypocrites and don't believe in low or no taxes?

Friday, February 7, 2014

Keynesianism was an attempt to repair prior interventions - it was not an attempt to repair a prior "market failure"

In 1977, Hayek explained to Bill Buckley that Keynes' "General Theory" was an ad hoc policy designed to reduce wage rates that were artificially too high as the result of prior government intervention regarding the value of the British pound and non-market privileges granted to labor unions:

Mr. Buckley:  Well, how would you account for the almost unanimous opinion of liberal Democrats that in order to reduce unemployment it is necessary for the government to pursue vast spending projects?  Since you speak of this as being almost manifestly ill-advised, the question arises why such superstitions should survive?

Mr. Hayek:  Well, it’s almost entirely the work of one man – in a way a genius, Lord Keynes – who is much more concerned about influencing current policies than about advancing the right sort of theories and he was operating then in a very peculiar situation.  Now in Great Britain, a successful attempt was made after World War I – which brought a good deal of inflation – to bring prices down to the pre-war level.  Prices came down but wages did not, so you had in the 1920s a position in Great Britain where wages were internationally too high and Britain had become noncompetitive on the world market.  The problem in Great Britain was to make Britain competitive again and it was clear that this required a reduction of real wages.  Notice these real wages had been artificially increased by increasing the value of the pound.  So because the pound was par to its former level, people receiving the same wartime salary and wages, or inflated wages, could buy much more.  Wages had not come down. 

Now, his first argument was wages must come down.  Then he found that was politically impossible, so he must find another way.  Instead of getting money wages down, we must depreciate the pound so that given money wages should correspond to a lower level of real wages and then by a curious intellectual somersault I would almost say he led himself to believe that even bringing down money wages was not of any use.  It involves a complex economic argument and all he concluded was that – well, we must inflate, in short. 

Now notice several things.  Keynes was a genius, but a genius who spent only a fraction of his time on economics – one of the busiest men I ever knew.  But he knew very little economics except particularly the Cambridge tradition, and he was much more concerned to influence policy at a particular moment than develop a true theory.  In fact, the last time I talked to him was after the war.  I knew him very well.  When I asked him wasn’t he getting alarmed about what his pupils who swallowed all this theory were doing after the war when the danger was clearly inflation, his answer was:

“Oh, don’t mind.  My theory was frightfully important in the 1930s.  Then, we needed an expansion to correct a situation.  Do trust me.  If this theory becomes dangerous, I’m going to turn public opinion around like this”. 

Six month later, he was dead.  And as usual, what happened is that the very doctrine – pupils of this man did apply to completely different situation a theory which was designed to influence policy in a particular situation.  The only thing I blamed Keynes for is to making his theory more attractive and effective, he called it THE general theory.  In fact, he knew precisely that it was not a general theory, but it was an argument to persuade government in the 1930s to do particular things.

Mr. Buckley:  It was an ad hoc.......?

Mr. Hayek:  It was entirely ad hoc.  He was one of the most fascinating men I knew, but the personal magnetism of this man not only persuaded the younger generation of economists.  And if I had been a much younger man and a student, I probably would have been swept off my feet as were most of the people.
                                 
Mr. Buckley:  Like Nixon.

Mr. Hayek:  No, no. (laughter).

https://www.youtube.com/watch?v=gaQcbGoW2C0


video



Mr. Hayek:  You’re perfectly right, but I’d like to add one thing.  You see, another political element was that, of course, politicians just lapped the argument and Keynes taught them if you outspend your income and run a deficit, you’re doing good to the people in general.  The politicians didn’t want to hear anything more than that – to be told that irresponsible spending was a beneficial thing and that’s how the thing became so influential. 

https://www.youtube.com/watch?v=N364sN5E0hQ

video

Saturday, September 21, 2013

Don't forget - - Socialist Worker's Party, I mean "Modern Money" lectures at Columbia Law School this Monday night!

Hard leftists at Columbia explain central banking while meticulously avoiding mention of Austrian analysis or even the US Constitution. 

In New York (and in Michigan and Massachusetts, home of Harvard),a lawyer shall not knowingly fail to disclose to the tribunal controlling legal authority known to the lawyer to be directly adverse to the position of the client and not disclosed by opposing counsel;

See Rule 3.3(a)(2) of the New York State Rules of Professional Conduct for attorneys.

Farley Grubb, one of the prior presenters, has written:


This new U.S. Constitution, ratified by the states and then adopted by Congress in 1789, profoundly altered the nation’s monetary structure. It was nothing short of revolutionary (Ferguson 1983, 404-405). Before the U.S. Constitution, the principal “inside” paper money in circulation was issued directly by government legislatures and backed not by specie (the “outside” money of the times) but by the issuing government’s future taxes.2 Very few banks existed—none before 1782 and only three by 1787. AFTER THE U.S. CONSTITUTION, GOVERNMENTS WERE PROHIBITED FROM ISSUING PAPER MONEY.

This fact has not been mentioned by the other presenters and is utterly contrary to the entire Magic Money Tree, I mean Modern Monetary Theory "paradigm".


UPDATE:

Before being allowed to practice law in the State of New York, each person must take the constitutional oath of office in open court:

I do solemnly swear that I WILL SUPPORT THE CONSTITUTION OF THE UNITED STATES, and the constitution of the State of New York, and that I will faithfully discharge the duties of the office of attorney and counselor-at-law, according to the best of my ability.

So, can you be a Keynesian and an attorney at the same time?

UPDATE 2:  

I've had a run-in with Mr. Vernengo before. 

From the mouths of babes: Tom Hickey inadvertently admits to understanding economic calculation and Cantillon Effects

Mike Norman blogger Tom Hickey has inadvertently a) admitted to understanding economic calculation; b) admitted that everyone engages in it and c) admitted that the process is distorted by emissions of funny money.  I had pointed out:

The funny money 1971 "dollar" was worth 32% of the 1933 "dollar". The 2013 "dollar" was worth 6% of the 1933 "dollar". And with every funny money emission, someone was able to rob others of their purchasing power, which is the whole point of the emission process.

Hickey responded to this irrefutable observation with this:

Looking at the relative value of a currency relative to the amount of gold it will purchase is irrelevant to most people, who are concerned instead with living standard, which is a function of productivity and income, for instance.

Yes, anyone who hoarded money under the mattress lost purchasing power. How many people would have been that stupid. 

This is after all a market economy and people are presumed to be intelligent enough to make reasonable investment decisions, which involves inflationary expectations [emphasis added]. 


See, everyone DOES engage in economic calculation and such activity is distorted by emissions of funny money. You just said so.

I'm bookmarking this one for posterity.

Hickey tried to take it all back, but it was now too late:

Let's put it differently. No one stashes money under the mattress for long periods other than crazy people.

I pound this point over and over:  EVERYBODY actually understands economic calculation to some degree in their real lives.  Keynesianism finds it necessary to expunge it from existing categories of thought.  Every day, all the time.

Hickey's statement is also an admission of his contempt for the unsophisticated. As I constantly explain, the purpose of funny money emissions is the theft of purchasing power BY THE ELITE from average people.  In Hickey's world, STUPID (his word) AVERAGE PEOPLE are going to be robbed blind by the process.  Cantillon Effects are real.  Who knew?

Monday, June 24, 2013

The very disturbed Keynesian liar "Lord Keynes" lies again (and again) - this time about the Austrian concept of capital goods.

The very disturbed personality "Lord Keynes" appears to be the only Keynesian in the galaxy to actually read Austrian writings. All other Keynesians purposefully distort Austrian analysis without actually having read any Austrian writings. "Lord Keynes" is different in that he reads the Austrians before distorting them.

His latest distortion is here:

The Austrian system of classification of capital goods cannot be considered a universal, clear cut, or strictly useful one, if many capital goods’ classification is simultaneously to be included under different orders. 

Also, the classification system obscures another point about capital: while capital goods are heterogeneous, many can have a significant degree of substitutability, flexibility and durability. A capitalist economy in which we find some important degree of adaptability, versatility and durability in the nature of capital goods also means that the Austrian capital theory underlying the Austrian business cycle theory (ABCT) is not a realistic vision of modern economies.


The problem with this analysis is that Austrians already know that a particular item can, in different situations, be considered a consumer good or a capital good, depending upon the state of mind and plans of the economic actor:

Although Rothbard’s discussion of the ham sandwich (pp. 8–9) is a useful introduction the concept of stages of production, even here the classification of goods ultimately relies on the subjective plans of individuals. There is not an objective “fact of the matter” about the order (first-, second-, third-, etc.) in which a certain good should be placed. The classification depends upon the means-end framework as conceived by the relevant individual. See Robert P. Murphy: "Study Guide to Man, Economy and State", pages 11-12.

Murphy further notes that:

The structure of production concept is also a particularly Austrian feature. By classifying goods as first-, second-, third-order, and so on, the Austrians never lose sight of the fact that production takes time. Murphy at page 9.

A purpose of the "structure of production" analysis is to emphasize that production takes time AND that the structure and how to analyze it must be based upon the subjective valuations of the participants. 

Finally, as a general observation, the Austrian concept of "economic calculation" is ubiquitous in the real world and in Austrian analysis. No Keynesian anywhere seems to understand it (or wants to) and "Lord Keynes" is always adamant about distorting it while failing to understand it. Economic calculation is what allows that market participants to accurately price each of the zillions of factors that make up the structure of production as it develops over time. Keynesian policies are based upon providing funny money and government spending subsidies which MUST distort economic calculation because the resulting transactions could not have been based upon purchases derived from the actors' own savings. Even the Keynesians admit that THE RESULTING TRANSACTIONS WERE INDUCED BY THEIR KEYNESIAN POLICIES (or else there would have been no point to imposing the polices). 

The impact of Keynesian policy is distortion analogous to a company owner directing his 2 million employees to purchase his daughter's latest popular music CD which few people actually enjoyed. No sane person would claim that the sales totals and proceeds for this CD had provided an accurate measure of what types of popular music the public would be willing to VOLUNTARILY purchase with their own savings. Similarly, Keynesian interference in the pricing process seriously distorts the pricing process of complex capital projects that are completed over time. 

Likewise, Keynesian interference in the pricing process produces asset bubbles which result in horrific "debt deflation" when the bubbles pop. This is a simple and straight forward application of basic Austrian concepts. Keynesians seem to recognize that the current system results in bubbles and debt deflation but suppress and obfuscate the cause, economic miscalculation induced by their own foolish policies. A bizarre result of this purposeful denial and obfuscation of the basic Austrian concept of economic calculation is the Minsky-ites.

Keynesians like "Lord Keynes" cannot allow the public to understand these basic truths so he does what he does to obscure those truths.


Saturday, March 2, 2013

A clueless Stephanie Kelton on the Thom Hartmann show: Modern Monetary Theory as Marxism lite


MMT Queen Stephanie Kelton was on the Thom Hartmann show this week asserting that "infrastructure" cannot be provided by "the private sector" and because the government can never run out of dollars, it  can never really run out of the ability to construct "infrastructure".  Similarly, the government can never run out of funny money with which to pay for anything, like $200 trillion in diaper changing costs for 70 million senile baby boomers.  Just as with the Marxists, production happens "SOMEHOW", and the only thing holding it back is a mistaken belief that we still live under a "gold standard".  The law of scarcity and the problems of economic calculation and pricing magically disappear as the result of the unlimited supply of funny money dollars (actually, MMTers lack the mental capacity to recognize and/or understand the concepts of scarcity, economic calculation and the pricing process).  

For a comparison to Marxism, let's examine this review of Thomas Sowell’s Marxism: Philosophy and Economics:

Perhaps the most telling example of Marx’s ideas in practice is the results of Lenin’s early acceptance of the SOMEHOW approach to all but labor, as indicated by this quote from State and Revolution cited by Sowell:

Capitalist culture has created large-scale production, factories, railways, the postal service, telephones, etc., and on this basis the great majority of the functions of the old “state power” have become so simplified and can be reduced to such exceedingly simple operations of registration, filing, and checking that they can be easily performed by every literate person, can quite easily be performed for ordinary “workmen’s wages”, and that these functions can (and must) be stripped of every shadow of privilege, of every semblance of “official grandeur.”

In fact, Sowell observes that:

The early history of the Soviet Union provided the most dramatic empirical refutation of the Marxian assumption that management of economic enterprises is something to be taken for granted as occurring SOMEHOW. When economic incentives were drastically reduce or abolished in the heady egalitarian period following the Bolshevik revolution, the Soviet economy ground to a halt. Widespread hunger and a halt to vital services forced Lenin to resort to his “New Economic Policy” that restored the hated capitalist practices. The later nationalizing of all industry under Stalin and his successors did not restore egalitarianism. Quite the contrary. There were highly unequal rewards to management, including today whole systems of special privilege stores to which ordinary Soviet workers have no access. Moreover, the managers of Soviet industry have been disproportionately the descendants of the managerial class of earlier Soviet and czarist times (193).

Then comes the noteworthy conclusion:

Many observers have seen these developments as mere betrayals of Marxist ideals, missing the more fundamental point that a crucial false assumption must be corrected in practice if people are to survive. Its continuing sacredness in theory can only produce hypocrisy. The betrayal may be real, but in Marxian terminology, “no accident.” A similar process is occurring in China, to which many Western Marxists transferred their hopes after disillusionment with the Soviet Union. This too is seen as simply a betrayal of Mao by Deng, rather than a nation’s painful learning from experience that a key assumption of Marxian economics is false (193-4).

The gross falsehoods of Marx’s communism is why the lament commonly heard from so many communist sympathizers — that “true” communism was never put into practice — ought to be rejected. In fact, the ideals of communism — collectivism, dialectical materialism, the evils of capitalism, the idea of labor as the source of all surplus value, the goal of reshaping of man’s nature, the principle of “from each according to his ability to each according to his need,” and so on — were substantially put into practice by the communist regimes of the 20th century. The fact that the result was widespread starvation, forced labor camps, unbearable misery, totalitarian police states, and mass death is hardly a reason to think that the more consistent application of these ideas would result in blissful paradise.

I have pried and prodded these MMTers until I'm blue in the face. While they understand how the various squirtings of funny money appear within our nefarious fiat money system, they have no conception of how the underlying economy actually works because they do not understand production or pricing and they believe that the entire society is held together by these allegedly essential squirtings of funny money by the fiat funny money system.