ayrnieu - All Comments

re: Marxist and Austrian Class Analysis

Sylvain — Fri, 27 Feb 2009 11:02:54 GMT

>> But what does a capitalist care if he commands animals as opposed to humans?

I don't understand this point. Surely any employer wants his employees to be productive, and the most productive people are the ones that use their capacity to think to their full extent. A rational bright employee is much more productive than an animal. Therefore it is in the rational self interest of the employer to hire the brightest human beings, especially in this day an age where there is barely any job left that a simple monkey could do.

>> An actor would have to be quite irrational not to encourage others to be irrational, not human, wherever such irrationality would be profitable to the first.

This is a very good point. And it is true that there are market activities that benefit from the irrationality of their clients, even though I would not point to advertising as such an example. Advertising is a tool to promote a product, it is not an end product in itself. I would rather point to religion, "mystic" goods, some products of alternative medecine, etc, as products that benefit from the irrationality of the consumers.

But the important question here is: so what? Yes there is a demand for irrational products, and yes there are producers to satisfy this demand, but how is that a bad thing? Are you saying that irrational products should be banned? Are you promoting a Federal Bureau for the Censorship of Irrational Market Activities? Who would command this FBCIM? Based on what rights? These are the important questions to ask yourself any time you attack the free market. Attacking the free market always means promoting a totalitarian approach.

>> Capitalism is then, far from proliferating humanness, disruptive of humanness.

Definitely the market activities that benefit from the irrationality of their clients do not promote human reason. But it is a very different thing to say that ALL market activities (capitalism) benefit from irrationality. You can certainly point to rational choices in your own personal consumption. I highly doubt that 100% of your consumption is based on irrational whims. You do need food to survive, you do want a home to live in, a car to travel with, quality clothes, quality audio equipment or whatever your personal preferences are, I would argue that MOST of your consumption choices are rational, and I don't even know you.

Most of the competition between producers is not based on their capacity to exploit human irrationality, it is based on their ability to satisfy consumer demand: better product, cheaper price. Yes it is also based on less objective factors, such as promoting the coolness of a brand, but that is only a tiny part of market activities.

>> Will the other employers outbid the first? They will if their bounded rationality incites them to ally with the worker. If, as is at least as likely, employers ally with eachother, they can instead split a huge profit that would have been marginal--after the "bidding war"--for the one. If, on the other hand, the employers are more inclined to compete against eachother than the workers, the latter need only wait for natural monopoly to have their wages reduced to subsistence.

In a free market there is no natural monopoly where an entrepreneur makes a ton of profit out of his employees without ever any other entrepreneur stepping in to offer these employees a better wage. This simply does not happen. Profits are a signal to attract competition. Collusion between entrepreneurs to lower wages never lasts long in the free market, as there is always a strong incentive to break the collusion. Say you and I are employers, and you employ someone at $1 an hour while he produces $10 worth of value, there is great incentive for me to offer this guy $2 an hour. Now we can decide to collude, you can ask me not to offer him $2, and maybe I will comply for a while, but that employee still produces $10 of value while being paid only $1, the profit incentive to offer him a better pay is still there and is still strong, so what about maybe a 3rd employer that would like to hire him? And what exactly do you offer me in exchange of me not hiring him? Collusion really is not that easy in a free market. However we currently do not have a free market, so your best bet is the political approach, maybe you can promote a law that would make it impossible for your competitors to hire this employee, maybe what you do could require a costly licence from the state, that would be a good barrier to compete with you, or maybe no other company should be allowed to build a factory near yours (for the sake of sustainable development or whatever), etc, there are plenty of political ways to stop the free market from working.

>> Homesteading is available only in the obsolete world of frontiers. Locke's proviso has been broken. His admirers don't seem to mind.

There are still pleny of government owned areas that could be open for homesteading. Also, private property is not limited to land, what about the sea? What about air waves? What about internet domain names? And there are probably still new areas yet to be discovered.

>> Charity, family...many people have access to neither. Even if these were universally available, why should one have to grovel before any?

This is a simple economic law, without the intiation of violence either you produce more than you consume or you rely on others offering their production to you. Now if you don't want to grovel before charity or family, then you can chose to be a free, independant, self sustained, individual who produces more than he consumes. This is simple economic reality.

re: Transcript of Bernanke's answer to Terry Easton on the Austrian school.

jimmy — Sun, 18 Jan 2009 00:29:53 GMT

"there has been a long-standing tendency to try to find a regulatory balance that reduces the costs of those booms and busts without costing us the benefits of the market forces"

This implies that his understanding of the problem is that reducing the cost of the booms requires forgoing some of the benefits of the market... i.e. he presumes that the ony way to handle the boom-bust cycle is regulation (anti-market).

And yet that is not the Austrian position at all. So his answer makes no comment on whether or not the Austrian solution/perspective might provide a better alternative to the current strategy. He dodges the question entirely by either misunderstanding or misrepresenting the Austrian position.

re: Transcript of Bernanke's answer to Terry Easton on the Austrian school.

Ken Schoolland — Thu, 15 Jan 2009 08:30:44 GMT

Terry asked the perfect question. Bernanke avoided answering that perfect question by 99%. But, after all, Bernanke is in this governmental post by political favor and he's not going to talk himself out of a job by acknowledging the role of the FED in creating the boom and bust cycle.

I'm interested in what BBC interviewers asked of Terry afterward. Terry's real message should not have been lost entirely to the LSE students and the BBC listeners.

Bravo, Terry!

re: Transcript of Bernanke's answer to Terry Easton on the Austrian school.

Heather Kopicki — Thu, 15 Jan 2009 00:34:43 GMT

Well, Cousin Terry, not too sure your perspective, but based on what I see here in the transcript, Mr. Bernanke seemed to provide the typical governmental rhetoric and didn't answer the questions posed. As a younger American, this causes great concern because we never seem to learn from history (being, I think the basis of your questions)and here we ago again to look at "the code" to solve the problem, but how long will it take to look at the code and then, when is something going to be done to amend "the code" and finally, how do we know "the fix" is right? Am I off base?

re: Transcript of Bernanke's answer to Terry Easton on the Austrian school.

Terry Easton — Wed, 14 Jan 2009 09:16:46 GMT

What I said in the first sentence was:

"Thank you. That's an Adam Smith tie (that I'm wearing)..." in response to being identified as the person wearing a red tie and the previous comment on Adam Smith made from the podium.

The challenge, of course, is an era of new-age Keynesians, is to continually remind people that there is a rational alternative to having "faith" in the government's money: the Austrian school's solution - real money which cannot be easily counterfeited by the official printers...

I suspect that The Mess will continue over the coming decades until we finally come full circle back to the pre-1913 era.

re: Transcript of Bernanke's answer to Terry Easton on the Austrian school.

ayrnieu — Wed, 14 Jan 2009 04:06:00 GMT

Ah, thanks; flash video is irritating enough to transcribe that I ought to first record it to mp3.

re: Transcript of Bernanke's answer to Terry Easton on the Austrian school.

TokyoTom — Wed, 14 Jan 2009 02:48:35 GMT

ayrnieu, thanks for this.

I suspect that Easton was referring to"blades" of grass (not to grass on fire).

Feel free to delete this.

re: Transcript of Bernanke's answer to Terry Easton on the Austrian school.

Conza88 — Wed, 14 Jan 2009 01:54:17 GMT

Bernanke is a retard.

re: A World Without Theft

Matt — Sat, 10 Jan 2009 19:57:03 GMT

There are a few things that would limit their ability and incentive towards injustice, but no doubt unjust acts will always be committed; we are looking to minimize them. It is utopian to think men can have a society with no crime.

The first hurdle for an insurance company would be the arbitration. The lack of a centralized arbitration monopoly would open up to a market of arbitration companies. These companies would act as neutral third parties to settle disputes. When you sign an insurance policy, you and the insurance company would both agree on an arbitration company you both would trust. When you have a dispute with the insurance company they would not be the ones to decide, the mutual third party would. Now its obvious that there would be nothing explicit to prevent arbitration and insurance companies from working together to rob you. However, if an arbitration company gained a reputation for being corrupt they quickly lose a lot of business as the selection of the arbitor is mutual.

Likewise, insurance companies would have an incentive to fulfill their contracts, otherwise they would gain a reputation of fraud and nobody would do business with them.

Lastly there's always the option of reinsurance. If you are uneasy with an insurance policy you can have it re-insured by another company, who would charge you a premium based on how much they trust the insurer and in the event of a breach in contract by the original insurer, the second insurer would fulfill the contract for you and seek to reclaim their money from the other company.

While insurers would have the power to break their contracts, they could not do it on a noticeable scale without provoking market forces. The government on the other hand is not limited by the market. When dealing with the state there is no re-insurance I can take out on the social security I'm promised. When dealing with a breach in contract with the state, you can only turn back to the state to decide on the case.

In conclusion, a free market system of order would not be perfect, but perfection is unattainable. The important part is that it would be more efficient, less costly, and much more severely limited in abusive power than the state.

re: Marxist and Austrian Class Analysis

Rye — Sat, 13 Dec 2008 03:52:57 GMT

@Tomb:

"each non-owner must come to the onwer (sic) for all manner of sustenance"

You assume that there exist "non-owners", where Austrians assert from the beginning that there are no "non-owners"; every person, in fact, owns themselves. Furthermore, because their persons are a means of production, no conscious person is bankrupt, they have always their own labor to trade.

"Even if these were universally available, why should one have to grovel before any?"

Not that I accept the foundation of your argument at all, but even the conclusion of your argument fails, because the alternative is aggressive force.

re: Marxist and Austrian Class Analysis

Tomb Like Bomb — Thu, 11 Dec 2008 03:40:21 GMT

The implication is that we cannot test capitalism in the world because there is no pure capitalism at present. So let's test capitalism by pure reason. If we assume a Gini coefficient of 1 (the simplest inequality), surely the socio-economic constraints are there: in addition to being a constant trespassor, each non-owner must come to the onwer for all manner of sustenance. Clearly, initial distribution is critical to the true "freedom" of contract. The Austrian is then faced with the obvious question, at what point of initial equality does capitalism open itself up to the promised "optimal distribution"? This is where the Austrian should consider opening his concept of "freedom" to relativity and begin to see it as directly related to equality.

The individually rational human has been disproven empirically. This the Austrians get around by calling one human only to the extent that he is individually rational. But what does a capitalist care if he commands animals as opposed to humans? An actor would have to be quite irrational not to encourage others to be irrational, not human, wherever such irrationality would be profitable to the first (See: the marketing industry). Capitalism is then, far from proliferating humanness, disruptive of humanness.

Will the other employers outbid the first? They will if their bounded rationality incites them to ally with the worker. If, as is at least as likely, employers ally with eachother, they can instead split a huge profit that would have been marginal--after the "bidding war"--for the one. If, on the other hand, the employers are more inclined to compete against eachother than the workers, the latter need only wait for natural monopoly to have their wages reduced to subsistence.

Homesteading is available only in the obsolete world of frontiers. Locke's proviso has been broken. His admirers don't seem to mind.

Charity, family...many people have access to neither. Even if these were universally available, why should one have to grovel before any? The paradise you describe is nothing so happy as what's available currently, and much less than the natural state of free access.

re: A World Without Theft

Ben Weiss — Mon, 17 Nov 2008 16:02:34 GMT

While I too have had these thoughts before, the stumbling block into which I inevitably run concerns information. In your model, you assume a world in which

1. Everyone knows (or trusts someone who knows) the laws in detail of their insurance company {not too hard here, but were I that insurance agency, I probably would insist on a period of adjustment and "we can change the rules when we want to but we'll notify you" ness.

In the last great fire in the Oakland (CA, USA) hills, many hundreds of homeowners lost their homes *without* full compensation because nobody but an engineer would notice that tiny clause in the contract they all signed which stipulated that the house would not be considered to be 100% destroyed (and therefore, 100% compensated) if any part of the chimney was left standing. Even a few engineers were duped by this. It turns out, (surprise surprise) that chimneys are *designed* to withstand intense heat for some reason, so there was, for instance, a street (upon which I personally stood and to which I can therefore personally attest) full of completely incinerated houses with nothing standing but all the chimnies.

Since insurance companies will always have brighter lawyers (on average) than everybody else, this leads us to the free market for:

2. Insurance Consultants could read to you your contract and even negotiate with your insurance agency, but there'd need to be some kind of mechanism for you to punish them if they screw you, no?

and, most persuasively,

3. How do we know any of the insurance companies ever treat any of their constituents the way they claim by their contracts? Why, with honest media, of course. Gee. We don't have that. How do we garentee that?

I'm not saying yours isn't the best solution to many of our problems I've yet found; in fact, it is. What I'm saying here is that I don't know how to solve the last mile, "who will watch the watchers" problem.

Right now, many of the problems with our current form of government can be traced to not having unbiased sources of information. Same problem. Solve it for the utopia in your article, solve it for our republic as it stands. Thoughts?

re: The State, the Intellectuals, and the Role of Anti-Intellectual-Intellectuals

MikeL — Sat, 18 Oct 2008 23:02:40 GMT

Fantastic speech!

Driving with Air Fresheners is Suspicious

The Swamp Land Exile — Wed, 27 Aug 2008 14:33:43 GMT

It would appear, according to US vs Branch (US Court of Appeals for the Fourth Circuit, 8/20/2008), that the cops have been given more powers: A federal appellate court ruled last week that police can delay a routine traffic stop as long as necessary

re: Marxist and Austrian Class Analysis

mitcjm — Wed, 30 Jul 2008 14:20:54 GMT

"When, by virtue of hunger and the socio-economic constraints surrounding getting something to eat, it becomes *necessary* to enter into a contract with an employer, who mind you doesn't *necessarily* have to employ *you*, the only freedom we can talk about is the freedom to starve."

An important question you should ask regarding your "starvation or contract" situation is: where do the "socio-economic contraints" (necessary for the existence of such a condition) arise from?

For example, say such conditions exist in Indonesia. Do those conditions exist because of a system of private property? Or do they exist because of a system of crony capitalism / state power conferring benefits on the favoured few?

"If all contracts were voluntary, who would make them except those who expect to get no less than what they give?"

The point is that each party values what the other party offers *more* than they value what they themselves offer. Value is subjective after all. The labourer values money more than he values his time and effort. The employer values the labour more than she values her present funds.

"A contract made under such conditions is anything but voluntary."

Is it *necessary* (and thereby non-voluntary) that the starving man enter into that contract? Not totally. Even in your posited situation (starvation or unfavourable contract)that person would still have other choices. He could have (in a real free market) planned for the future by homesteading some land and planting food, or by joining a cooperative that worked some land. Or he could go to a charity until he find a job that he likes. Or he could ask his family for help until he found favourable employement. You do have the freedom to starve, but you also have just as much freedom to prevent that from occuring.

We should also remember that there are other employers seeking employees too. That means that by only offering subsitence level wages the employer loses out as other employers will outbid her.