We would be less advanced technologically advanced without the government subsidizing research and development. And during war there is the greatest growth in technology. A historical example of this would be WW2. As a result of the Second World War, we have jet engines, rockets and nuclear power.
Mises community, what is your response?
He is also an individual and values the improved TVs.
Stalin is also an individual and values ruling over massive populations, even if it kills them.
It does not abolish the price system and can still use the prices to compare alternative projects.
Yeah, it can use prices external to it to try and navigate.
If the government monopolizes the production of, let us say, armoured vehicles, it only establishes a monopoly in that field. Factors of production, such as steel and rubber must still be bid away from other producers in the market place. Also, governments can then turn around and sell the tanks to other countries. So it is possible for a government to compare prices.
Nope. It isn't. A monopoly has no way of knowing whether it is putting resources to their optimal use internally. The same would apply to a massive cartel of firms. They would suffer from calculational chaos. They could rely on outside prices, but internally they'd be stuck with arbitrary pricing. The government, being secure in its income, has no way of knowing whether it is satisfying consumers via the profit-and-loss mechanism. It simply extorts the funds then uses them to satisfy its own preferences.
But governments were responsible for their development.
And?
They are not needed to create it. But, they may be more efficient at doing so.
Why? Why assume this? The market is what brings various technologies to consumers, not the useless, slow government. It may come up with technologies for its own ends, but at what expense? How can it possibly know if it's efficient or not?
After all, the government subsidizes R&D. This is a function that they perform.
How does it know whether the money it extorted could've been put to more optimal uses in private hands? So what if it "subsidizes" it? It also subsidizes food production in some countries.
We wouldn't have the same nuclear power or jet engines or rocket technology that we do now without government investment in these fields.
And we wouldn't have had devastating wars, technology used by the government to spy on individuals at every minute of the day &c. Besides being utterly unprovable (how do you know this?), the statement is meaningless in light of consumer preferences. If consumers want technology, they're free to save or donate to scientific foundations or in their capacity as entrepreneurs invent. If they do not, that is the end of it. Trying to force technology down their throats because it's "good" for them is just the government prioritizing its own preferences over theirs. Why should I care what it wants? And why should I believe it can allocate funds efficiently here when it cannot even run a farm properly? Ridiculous.
To darkness I condemn you...
Performative Contradiction: We would be less advanced technologically advanced without the government subsidizing research and development. And during war there is the greatest growth in technology. A historical example of this would be WW2. As a result of the Second World War, we have jet engines, rockets and nuclear power. Mises community, what is your response?
This can be addressed in several ways.
First, opportunity cost. Resources are finite, governments can not increase the amount of resources it can only redirect them. Before the government can direct resources towards research it must first take resources away from other endeavor.
In war time we do not see the "greatest growth in technology" we see technology advanced are confined to a limited field: weapons. Since weapons see little development outside of war times, major advances occur once war breaks out. Of course, the opportunity cost here is that development of new weapon technologies means that fewer productive technologies are created.
Now we get to the calculation problem. How does the government know how much research is enough and how much is too much. If every person were employed as a scientist, technology could advance at the fastest pace possible, but the trade off would be that no one is working to grow food, build homes, or in factories.
Clearly its possible for there to be too much research so we must find the proper balance between production of technologies and production of consumer goods. That proper balance is determined by the preferences of consumers. And the only way individuals can demonstrate their preferences is through the market.
Any amount of research other than the amount consumers are willing to bear is the wrong amount and forces people to be worse off then they would be if they were left alone.
A lot of times subsidized R&D causes technology to stagnate because it makes one and only one branch of research (government research) more profitable than any other. An example of this would be the lack of research done on solar panels and fuel efficient cars because of subsidized R&D in other enviromental technologies (I forgot which ones really) that turned out to be not as efficient at removing waste.
I find it funny that so many people criticize Austrians for being obsessed with gold when they seem to have some attachment to techonology beyond it's use in helping individuals attain their ends.
In any case, the government can't invest. Investing means deferred consumption, as the government spends the money without the intention of increased future consumption. As such, all spending by the state is consumption.
In any case, the government has no way of knowing whether or not it should be spending it's money in a certain area. It lacks the price system, as a monopolist there is no bidding between the state and private individuals for factors of production, this means that there is essentially no way for the government to know whether or not it is making a loss, since it is impossible to compare different resources. As a monopolist the state can't tell whether or not it is satisfying consumers demand, it draws its resources directly from the taxpayers through force. It needn't pass the market test of whether or not it is beneficial, the price system.
As such as government "investment" is arbitrary, based on the whim of a central planner or whichever defence contractor has the most political power.
Perhaps the war did lead toa few new inventions, a new way of building ships for cheaper. This can only be seen as "good" in a purely technological sense, if people really did value it highly then the state wouldn't have needed to intervene. The Nazis came up with a few new ways to exterminate people in vast quantities, according to this argument that would have to be a good thing. And if it is then why not wage perpetual war?
"You don't need a weatherman to know which way the wind blows"
Bob Dylan
It is impossible to predict the technological path that history would have taken without government intrevention. We would have airship that transport large amount of cargo for all we know. Or we could have an electromechanical version of the internet(completed with punchcards!) that eventually drive the development of modern computers.
Who know? Fill free to fill your alternative history speculation here...
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kiba: It is impossible to predict the technological path that history would have taken without government intrevention. We would have airship that transport large amount of cargo for all we know. Or we could have an electromechanical version of the internet(completed with punchcards!) that eventually drive the development of modern computers. Who know? Fill free to fill your alternative history speculation here...
It's not relevant. We could still be without TV, internet etc. without the state intevening in the economy. We'd be better off nonetheless.
GilesStratton:I find it funny that so many people criticize Austrians for being obsessed with gold
What does this topic have to do with gold? I never critisized Austrians for allegedly being obsessed with gold.
GilesStratton:they seem to have some attachment to techonology beyond it's use in helping individuals attain their ends
It seems pretty obvious that technology, by definition, only has value in helping individuals attain their ends.
GilesStratton:As a monopolist the state can't tell whether or not it is satisfying consumers demand, it draws its resources directly from the taxpayers through force.
This is true. It does obtain its revenue through compulsion.
GilesStratton:It lacks the price system, as a monopolist there is no bidding between the state and private individuals for factors of production, this means that there is essentially no way for the government to know whether or not it is making a loss, since it is impossible to compare different resources.
I'm not so sure about this. Once the government collects taxes, it goes out and purchase factors of production on the market. It directly competes with private individuals in this respect. And it seems possible for the government to compare the cost of alternative projects it can embark on. I don't see how the government is a monpolist in the production of technology.
GilesStratton:As such as government "investment" is arbitrary, based on the whim of a central planner or whichever defence contractor has the most political power.
Maybe. Maybe not.
GilesStratton:Perhaps the war did lead toa few new inventions, a new way of building ships for cheaper. This can only be seen as "good" in a purely technological sense, if people really did value it highly then the state wouldn't have needed to intervene. The Nazis came up with a few new ways to exterminate people in vast quantities, according to this argument that would have to be a good thing. And if it is then why not wage perpetual war?
People do value jet engines and the internet. And they both owe their existance to military investment. And the ability to exterminate was prabably a good thing from the National Socialist's point of view. But I never argued that was a good thing. Nor is it inherent in the original argument that government investment is needed to encourage technological development.
GilesStratton:It's not relevant. We could still be without TV, internet etc. without the state intevening in the economy. We'd be better off nonetheless.
Didn't the internet develop out of the arpanet, which was a United States Defence Department project initiated during the cold war?
Performative Contradiction:What does this topic have to do with gold? I never critisized Austrians for allegedly being obsessed with gold.
Nor did I ever say you did.
Performative Contradiction:It seems pretty obvious that technology, by definition, only has value in helping individuals attain their ends.
That's not true. In a society of individuals who wished to live a very traditional lifestyle without technology if one individual came along and forced them to hand over their cash so he could make improved TVs to help them, he would be the one benefitting.
Performative Contradiction:I'm not so sure about this. Once the government collects taxes, it goes out and purchase factors of production on the market. It directly competes with private individuals in this respect. And it seems possible for the government to compare the cost of alternative projects it can embark on. I don't see how the government is a monpolist in the production of technology.
For a starters, government taxation in and of itself distorts the market price system. It is impossible for the government to develop an equal tax whereby all areas of the economy are equally effected. To do so the government would have to create a market rate of taxation, which is impossible since taxation and the free market are not compatible.
If government establishes itself a monopoly in an industry it will have nobody to bid against for the specific factors of production, therefore economic calculation is impossible. How can anybody add up factors of prodction x, y and z and then compare with the price they sold it for? They can't.
Now if the government doesn't have a monopoly then it will outcompete all of it's competitors, because the state enteprise is funded by taxes it can charge a lower price and pay a higher price for factors of production. Even without a monopoly the price system is largely distorted. In the former Soviet Union for example the state had a monopoly in every industry, there was calculational chaos, yet this was when they could rely on outside prices. In other words the price system wasn't completely eliminated, likewise for the example we're discussing
Performative Contradiction:People do value jet engines and the internet.
In that case no government intervention is needed.
Performative Contradiction:And they both owe their existance to military investment.
As I said earlier, it's not correct to call it investment, and it doesn't follow that because jet planes and the internet were created by the coercion that they can only be created by coercion.
Performative Contradiction:Nor is it inherent in the original argument that government investment is needed to encourage technological development.
Then what's your point?
GilesStratton: Performative Contradiction:It seems pretty obvious that technology, by definition, only has value in helping individuals attain their ends. That's not true. In a society of individuals who wished to live a very traditional lifestyle without technology if one individual came along and forced them to hand over their cash so he could make improved TVs to help them, he would be the one benefitting.
GilesStratton:For a starters, government taxation in and of itself distorts the market price system. It is impossible for the government to develop an equal tax whereby all areas of the economy are equally effected. To do so the government would have to create a market rate of taxation, which is impossible since taxation and the free market are not compatible.
GilesStratton:If government establishes itself a monopoly in an industry it will have nobody to bid against for the specific factors of production, therefore economic calculation is impossible. How can anybody add up factors of prodction x, y and z and then compare with the price they sold it for? They can't.
GilesStratton: Performative Contradiction:People do value jet engines and the internet. In that case no government intervention is needed.
GilesStratton: Performative Contradiction:And they both owe their existance to military investment. As I said earlier, it's not correct to call it investment, and it doesn't follow that because jet planes and the internet were created by the coercion that they can only be created by coercion.
That's true. But maybe they wouldn't have been.
GilesStratton: Performative Contradiction:Nor is it inherent in the original argument that government investment is needed to encourage technological development. Then what's your point?
Sorry. I should have worded this better. It is true that government is not the only producer of technology. They are not needed to create it. But, they may be more efficient at doing so. After all, the government subsidizes R&D. This is a function that they perform. We wouldn't have the same nuclear power or jet engines or rocket technology that we do now without government investment in these fields.
Performative Contradiction: He is also an individual and values the improved TVs.
Yes, that is true. And in regards to economics we can go no further than to say his actions have led to a decrease in utility, in the cardinal sense.
Performative Contradiction:It does not abolish the price system and can still use the prices to compare alternative projects.
But the prices don't reflect reality, that's the problem. Like I said, the USSR didn't entirely abolish prices either, yet there was economic chaos. it's difficult to argue with that fact. Ultimately, these new prices don't accurately reflect consumers preferences.
Performative Contradiction: If the government monopolizes the production of, let us say, armoured vehicles, it only establishes a monopoly in that field. Factors of production, such as steel and rubber must still be bid away from other producers in the market place. Also, governments can then turn around and sell the tanks to other countries. So it is possible for a government to compare prices.
Yes, the government can compare prices. You're ignoring the fact that these prices will be distorted. They won't reflect reality the way prices in a free market do. As the government is funded by taxation it will be able to offer lower prices for certain factors of production than privately owned enterprises. This means that first off all there won't be a market for factors specific to the making of tanks (say, a certain type of metal or something, I don't know).
Performative Contradiction:But governments were responsible for their development.
And? This doesn't make it good.
Performative Contradiction: That's true. But maybe they wouldn't have been.
Which only makes the fact that government produced it worse.
Performative Contradiction:But, they may be more efficient at doing so. After all, the government subsidizes R&D. This is a function that they perform. We wouldn't have the same nuclear power or jet engines or rocket technology that we do now without government investment in these fields.
Which only shows society doesn't value it. In which case there's no justification for government forcing peoples money from them to pay for it.
Jon Irenicus:Stalin is also an individual and values ruling over massive populations, even if it kills them.
lol. nice.
Jon Irenicus:The government, being secure in its income, has no way of knowing whether it is satisfying consumers via the profit-and-loss mechanism. It simply extorts the funds then uses them to satisfy its own preferences.
I concede this point.
Jon Irenicus: If the government monopolizes the production of, let us say, armoured vehicles, it only establishes a monopoly in that field. Factors of production, such as steel and rubber must still be bid away from other producers in the market place. Also, governments can then turn around and sell the tanks to other countries. So it is possible for a government to compare prices. Nope. It isn't. A monopoly has no way of knowing whether it is putting resources to their optimal use internally. The same would apply to a massive cartel of firms. They would suffer from calculational chaos. They could rely on outside prices, but internally they'd be stuck with arbitrary pricing.
Nope. It isn't. A monopoly has no way of knowing whether it is putting resources to their optimal use internally. The same would apply to a massive cartel of firms. They would suffer from calculational chaos. They could rely on outside prices, but internally they'd be stuck with arbitrary pricing.
In this case it would only be a monopoly nationally. It would not have an international monopoly. So there would still be prices and calculation would be possible. And firms would only be internally chaotic if they are integrated multi-stage firms and there are no markets for intermediate stages.
Jon Irenicus: They are not needed to create it. But, they may be more efficient at doing so. Why? Why assume this? The market is what brings various technologies to consumers, not the useless, slow government. It may come up with technologies for its own ends, but at what expense? How can it possibly know if it's efficient or not?
Ok, you're right. Can you give me some good examples of market produced technologies?
Jon Irenicus:And we wouldn't have had devastating wars, technology used by the government to spy on individuals at every minute of the day &c. Besides being utterly unprovable (how do you know this?), the statement is meaningless in light of consumer preferences. If consumers want technology, they're free to save or donate to scientific foundations or in their capacity as entrepreneurs invent. If they do not, that is the end of it. Trying to force technology down their throats because it's "good" for them is just the government prioritizing its own preferences over theirs. Why should I care what it wants? And why should I believe it can allocate funds efficiently here when it cannot even run a farm properly? Ridiculous.
This is good stuff. Do you mind if I tone down the forceful language a little bit and use these arguments. And also, what government run farms are you refering to? Can I get a source? Oh, and do you have some examples of government technology that's been a huge expensive waste?
GilesStratton: Performative Contradiction: He is also an individual and values the improved TVs. Yes, that is true. And in regards to economics we can go no further than to say his actions have led to a decrease in utility, in the cardinal sense.
You mean an increase in utility for him and a decrease in utility for the other party. and in the ordinal sense.
GilesStratton: Performative Contradiction:It does not abolish the price system and can still use the prices to compare alternative projects. But the prices don't reflect reality, that's the problem. Like I said, the USSR didn't entirely abolish prices either, yet there was economic chaos. it's difficult to argue with that fact. Ultimately, these new prices don't accurately reflect consumers preferences.
There is a difference. In the USSR, the prices which were used were international prices, which reflected the preferences of international consumers but not soviet consumers. In the situation were there is partial expropriation, the prices reflect the preferences of net tax recipiants and to the extent that they are sold on international markets, the preferences of foreign consumers.
GilesStratton:Yes, the government can compare prices. You're ignoring the fact that these prices will be distorted.
No I'm not. I'm just saying that calculation is not impossible in this case.
GilesStratton:They won't reflect reality the way prices in a free market do.
Agreed.
GilesStratton:As the government is funded by taxation it will be able to offer lower prices for certain factors of production than privately owned enterprises.
Which would be in accordance with the preferences of tax consumers as an aggregate but not all consumers in society as an aggregate.
GilesStratton:This means that first off all there won't be a market for factors specific to the making of tanks (say, a certain type of metal or something, I don't know).
If the factor is specific, there is no alternative and no opportunity cost to calculate.
GilesStratton: Performative Contradiction:But, they may be more efficient at doing so. After all, the government subsidizes R&D. This is a function that they perform. We wouldn't have the same nuclear power or jet engines or rocket technology that we do now without government investment in these fields. Which only shows society doesn't value it. In which case there's no justification for government forcing peoples money from them to pay for it.
Can't really disagree.
Performative Contradiction: Ok, you're right. Can you give me some good examples of market produced technologies?
The Light Bulb, Dishwasher, Electric Iron, Microwave Oven, Refrigerator, Mousetraps, Alarm clock, Disposable Diapers, Safety Pins, the Zipper, Velcro, Sewing Machine, Handheld Hairdryer, the Bottlecap, railway locomotion, Calcuator, Ballpoint pen, Post-it notes, Paper clips, Telephone, Fax Machine, Photocopier, the cash Register, televison, radio, cd/dvd's, chainsaws, Vaseline, adhesive bandages, Lasers, Cat scanners., batteries, transistors, microchips..and really the list goes on and on and on.
Performative Contradiction: Oh, and do you have some examples of government technology that's been a huge expensive waste?
Oh, and do you have some examples of government technology that's been a huge expensive waste?
Well one only needs to take a look at the government's military budget to see some of the largest waste in history when it comes to new technology in killing people.
Performative Contradiction:You mean an increase in utility for him and a decrease in utility for the other party. and in the ordinal sense.
You're correct, sorry.
Performative Contradiction:No I'm not. I'm just saying that calculation is not impossible in this case.
Not entirely no. But that doesn't mean government will be able to rationally allocate resources.
Performative Contradiction:If the factor is specific, there is no alternative and no opportunity cost to calculate.
Sorry, I may have worded it incorrectly. My point is that without an external market for them there will be certain factors of production of which the price will be unknown. Hence, it will be impossible to rationally calculate whether or not they are satisfying the demands of the consumers?
Performative Contradiction:There is a difference. In the USSR, the prices which were used were international prices, which reflected the preferences of international consumers but not soviet consumers. In the situation were there is partial expropriation, the prices reflect the preferences of net tax recipiants and to the extent that they are sold on international markets, the preferences of foreign consumers.
The same thing applies here though.
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