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 nothing but a ruse 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).

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.