Economics Questions

Re: Government and Technology

corpus delicti — Sun, 23 Nov 2008 18:29:57 GMT

GilesStratton:

In light of this it looks like I need to read up on the calculation debate, what is there aside from Mises' ECSC, which I've just finished reading.

Jeffrey Tucker uploaded The Concise Guide to Economics to Scribd the other day. I seem to recall a short chapter on the calculation debate (chapter thirty-something) in it with references for further reading, FWIW.

Re: Government and Technology

hayekianxyz — Sun, 23 Nov 2008 18:18:28 GMT

In light of this it looks like I need to read up on the calculation debate, what is there aside from Mises' ECSC, which I've just finished reading.

Re: Government and Technology

Jon Irenicus — Sun, 23 Nov 2008 18:17:12 GMT

Here's some material on Japan and Korea. It's mostly focused on protectionism, but the type of protectionism they employed centered around high tech firms.

As well as these:

http://org.elon.edu/ipe/wyne.pdf

http://www.freetrade.org/pubs/freetotrade/chap7.html

http://www.freetrade.org/pubs/freetotrade/chap2.html

Re: Government and Technology

corpus delicti — Sun, 23 Nov 2008 17:30:08 GMT

Performative Contradiction:

What is the simplest way of explaining how entrepreneurs calculate on the market?

Guestimation or as someone elsewhere in these forums said it: Back-of-the-envelope calculation.

The successfulness of such calculation ultimately depends, as eliotn correctly write, on profit and loss (PDF, Print).

Re: Government and Technology

eliotn — Sun, 23 Nov 2008 14:59:40 GMT

Performative Contradiction:
What is the simplest way of explaining how entrepreneurs calculate on the market?

I think through profits and losses, but I could be wrong.

Re: Government and Technology

Performative Contradiction — Sun, 23 Nov 2008 13:52:38 GMT

What is the simplest way of explaining how entrepreneurs calculate on the market?

Re: Government and Technology

corpus delicti — Sun, 23 Nov 2008 09:22:41 GMT

JonBostwick seems to approach this the "macro" way. Often I do the same.

When discussing R&D qua R&D (as opposed to R&D qua a specific technology or qua libetarianism) I find Fritz Machlup's "Can There Be Too Much Research?" (Science, 1958) to be a good starting point. The added bonus is that few will question an article in Science out of hand.

(Hopefully you have access to JSTOR)

Re: Government and Technology

JonBostwick — Sun, 23 Nov 2008 07:42:02 GMT

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.

Re: Government and Technology

Jon Irenicus — Sun, 23 Nov 2008 02:53:33 GMT

Tibor Machan has a book called Science in a Free Society or something to that effect. I haven't read it but it's worth checking out.

Re: Government and Technology

Performative Contradiction — Sat, 22 Nov 2008 20:24:47 GMT

Jon Irenicus:
The point is that it does not have to care whether it pleases its consumers or not. It is not subject to the profit motive, in addition to being vertically integrated in some cases (though it can by pass this problem by outsourcing work to firms on the market... but this does not solve the former problem.)

Agreed.

Jon Irenicus:

Ok, you're right. Can you give me some good examples of market produced technologies?

Most technologies from the Industrial Revolution were privately funded, e.g. the lightbulb and the telephone. And as for one fomented by the government... see this. Most sources on this are in books, so I'll mention this one and this one. The latter documents great industrial innovators. This article is good on briefly summarizing the basics of the topic. And on problems with government involvement with science, see this and this.

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?

I mean the USSR/China and other countries which took direct control over agriculture. Their history is well documented in this regard, so I'll just link to an article. The US intervenes by way of subsidization. It's still destructive. NASA has been a mixed bag with regard to waste. A lot of its programmes have generated massive failures. Here's an article on it. Most of the time, innovation to do with government technologies comes from private firms, which discover how to put it to use in accord with consumer preferences. Firms like Virgin and Google are completely surpassing the government in moving funds to technologies that now interest the market, e.g. Virgin's owner attempting to make space travel affordable. Some technologies might not have existed at all. Japan is a good example of a country where subsidization looms large, and has not had the results it was anticipated it'd have. I'll post an article on that later, if I can find it. What is this for, if I might ask?

Thank you. And this is for creating an argument for someone who strongly feels that government subsidization is needed for R&D and who doesn't know anything about economics. I thought it might be a good idea if I created a new ID and just threw the argument out there like a newbie and see what ppl's response was to it. I've noticed in the past that when ppl come on to the forum and say, "I need help with this", the quality of response is much lower. And it was fun to get into an argument over calculation, which is a bit more of a grey area in AE than most of us will admit. Anyway, please do post later. And I've also been reading Rothbard's "Science, Technology, and Government."

Re: Government and Technology

Performative Contradiction — Sat, 22 Nov 2008 20:14:29 GMT

GilesStratton:

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?

I didn't say it properly. What I meant is that there is no alternative line of production for a specific factor and therefore no opportunity cost, and therefore no need for calculation. And yes, without an external market, there is no way to calculate. But even when the government monopolizes an industry, it only does so within it's territory, so there can still be external international markets for the products produced as well as the factors of production.

Re: Government and Technology

Jon Irenicus — Sat, 22 Nov 2008 20:08:38 GMT

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.

The point is that it does not have to care whether it pleases its consumers or not. It is not subject to the profit motive, in addition to being vertically integrated in some cases (though it can by pass this problem by outsourcing work to firms on the market... but this does not solve the former problem.)

Ok, you're right. Can you give me some good examples of market produced technologies?

Most technologies from the Industrial Revolution were privately funded, e.g. the lightbulb and the telephone. And as for one fomented by the government... see this. Most sources on this are in books, so I'll mention this one and this one. The latter documents great industrial innovators. This article is good on briefly summarizing the basics of the topic. And on problems with government involvement with science, see this and this.

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?

I mean the USSR/China and other countries which took direct control over agriculture. Their history is well documented in this regard, so I'll just link to an article. The US intervenes by way of subsidization. It's still destructive. NASA has been a mixed bag with regard to waste. A lot of its programmes have generated massive failures. Here's an article on it. Most of the time, innovation to do with government technologies comes from private firms, which discover how to put it to use in accord with consumer preferences. Firms like Virgin and Google are completely surpassing the government in moving funds to technologies that now interest the market, e.g. Virgin's owner attempting to make space travel affordable. Some technologies might not have existed at all. Japan is a good example of a country where subsidization looms large, and has not had the results it was anticipated it'd have. I'll post an article on that later, if I can find it. What is this for, if I might ask?

Re: Government and Technology

Performative Contradiction — Sat, 22 Nov 2008 20:06:40 GMT

auctionguy10:

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?

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.

Thank you.

Re: Government and Technology

hayekianxyz — Sat, 22 Nov 2008 20:00:33 GMT

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.

Re: Government and Technology

auctionguy10 — Sat, 22 Nov 2008 19:57:29 GMT

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?

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.