Would you then recommend that we just wait until gasoline becomes unaffordable, and then begin looking for something to replace it?

I stopped replying to you because I doubt you are taking the discussion seriously. This is just another example. You pretend that there are less options then there really are and present a false dilemma. I don’t know whether you just want to screw with people or lack the patience or imagination to carefully construct an argument, but it’s irrelevant because you don’t seem to learn.

Here you are implying that without intervention, every company in the oil industry will persistently ignore planning based on the economic calculation and opportunity cost until it is too late, thus leading to their own bankruptcy, while at the same time, the government will act in a long-sighted manner and forsee the development of new technologies, consumption requirements and oil reserves more accurately without resorting to economic calculation. This is a very bold claim to make. Did you come to this conclusion yourself or is there a source of this?

That’s your argument? That it doesn’t work for commodities but for labour they’ve “worked out fine”. Good god. How exactly is it different? A good requires some labour and some stuff. How is it a good idea to restrict prices of the labour but not the stuff – what is the reason for this?

“And I do find that nearly everything in life has “not-too-hot, not-too-cold” limits. We wouldn’t like living on this planet if the average temperature was less than 32 degrees F. Nor would we like it if it were 150 degrees F. Whereas it’s very comfy in the middle.”

I can’t put my thoughts about this statement into words.

Would you then recommend that we just wait until gasoline becomes unaffordable, and then begin looking for something to replace it?

“You will not need to provide subsidies to wind farms if they are truly more efficient from a cost-benefit perspective in the long run.”

If we were to remove all subsidies to oil and gas, make them pay royalties for the public assets they claim as their own and pay for their own cleanup costs, solar and wind would be competitive energy sources without any special subsidies. But since that’s not going to be happening any time soon, wind would require a small subsidy to level the playing field.

Tidal’s another good source, but very capital intensive, like nuclear. Only a government would probably have the resources to embark on a tidal scheme. They would very likely start their pilot project off the New England shore, with its concentration of population and extreme tidal differences. But if a consortium of capitalists could come up with fifty or a hundred billion in venture capital, they could probably do it without government participation.

“Yes yes Michael, all very predictable waffle from you once more. Nevertheless, it appears the statement

“I just disagree that I asserted number four: that I’ve endorsed price controls.”

is now something with which even you disagree. It isn’t an unclear or ambiguous statement, you say quite clearly that you don’t support price controls, then construct an argument for when you do endorse them.”

I said what I said with the following definition of ‘price controls’ in mind: the setting of maximum or minimum prices by the government. Generally, when commodity prices are set this way the results are counterproductive. So I oppose such schemes generally.

With the pricing of labor, on the other hand? We’ve had minimum wage laws now since 1938, and they’ve worked out fine. So I have no problem with government-set limits in that specific area.

And I do find that nearly everything in life has “not-too-hot, not-too-cold” limits. We wouldn’t like living on this planet if the average temperature was less than 32 degrees F. Nor would we like it if it were 150 degrees F. Whereas it’s very comfy in the middle.

The issue here is, do you think things would get better if just dismantled all of it? Dropped all rules concerning monetary transactions and proceeded on the principle that the buyer should best beware? Gave up our transfers, subsidies and taxes, and just let everything find its own level? Forgot all our overseas obligations and gave up support of the dollar that every nation now holds their life’s savings in? There would be a worldwide convulsion. My feeling is that they’d all band together to try to support the dollar without us. And that this country would emerge destitute and powerless. It would be an act of suicide.

You also have me as favoring “inflating” the money supply. Which is something I support no more than I would DE-flating the money supply. You really should read me more closely.

Elsewhere I’ve taken Bala to task for using an Austrian definition of this confounded word where a standard definition is the one intended. I try to make the distinction clear by referring to PRICE inflation… or to adjustments in the money supply. The definition in use here would be, by anyone else’s standards, incorrect.

Here’s my comment to Bala:

(Bala:) “You seem incapable of realising that the link I gave was on the very concept “definition”. I was trying to tell you that there is no such thing as “your definition” and “my definition” but just “the definition” of each concept. The first step in understanding anything is defining it first.

“For instance, if one were to take the term “inflation”, it correctly refers to an increase in the money supply (including money proper, money substitutes and fiduciary media). That you choose to “define” it as “increase in the general level of prices” does not change the definition. If, however, you insist on having a discussion based on your preferred “definition”, there is no way to have a meaningful discussion. When I dismiss the conclusions you draw based on your “definition”, I do so by dismissing your “definition” as incorrect in the first place. There is such a thing as a proper “definition”, you see.”

(Me:) Just not the case. This is the kind of thing that happens when you only talk to people within the cult. Your definition excludes the standard one in use by the rest of the English-speaking world.

From Wikipedia:

“In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time. When the price level rises, each unit of currency buys fewer goods and services; consequently, annual inflation is also an erosion in the purchasing power of money – a loss of real value in the internal medium of exchange and unit of account in the economy. A chief measure of price inflation is the inflation rate, the annualized percentage change in a general price index (normally the Consumer Price Index) over time.”

They do allow that “High rates of inflation and hyperinflation can be caused by an excessive growth of the money supply.” Note use of the word “can”.

Don’t like Wikipedia? Here’s the definition from Investopedia:

“The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling. Central banks attempt to stop severe inflation, along with severe deflation, in an attempt to keep the excessive growth of prices to a minimum.”

Try Webster’s. Funk & Wagnalls. Here it is from InvestorWords:

“The overall general upward price movement of goods and services in an economy, usually as measured by the Consumer Price Index and the Producer Price Index. Over time, as the cost of goods and services increase, the value of a dollar is going to fall because a person won’t be able to purchase as much with that dollar as he/she previously could. While the annual rate of inflation has fluctuated greatly over the last half century, ranging from nearly zero inflation to 23% inflation, the Fed actively tries to maintain a specific rate of inflation, which is usually 2-3% but can vary depending on circumstances. opposite of deflation.”

The definition is always the same. Except in this little universe.

How exactly do you know – eschewing theory as you do so vehemently – that an event or events is an “unintended consequence” of this policy, or is an “unintended consequence” of another policy? Or what if an event it is thought to be the “intended consequence” of a policy (thereby suggesting this policy “works”) but it is in fact an “unintended consequence” of of another policy? How can we tell the difference?

Anyone suggesting we manage complex system in the fashion you suggest – without theory and instead just like the Wizard of Oz constantly tweaking nobs and levers to keep things “not too hot and not too cold” by looking at the output – is broadcasting one very obvious fact about themselves: that they have NEVER ACTUALLY MANAGED A COMPLEX SYSTEM CORRECTLY, because if you had you would know that these actions are simply futile.

When it’s the government, and it fails it always claims it failed because it needs more money to do it right. That’s always the answer it gives, and it becomes ever more wasteful and fails over and over again. I never have the ability to replace it when it fails.

Nor will you have to provide subsidies to create new alternative fuels. People in government always imagine that they help these situations with paying for science and they don’t, instead they give grants to people who are less productive. These people give the government feedback that it must keep granting them money and limit industry by imposing caps, taxes, etc. They don’t actually end up producing any new energy sources like they were paid to do either.

“Whether it’s a complex organism, a complex social system, a complex mechanism or a complex strategy, it won’t work well without a plan.”

Complex organisms need plans? Really? You say evolution is false then?

“I just disagree that I asserted number four: that I’ve endorsed price controls.”

is now something with which even you disagree. It isn’t an unclear or ambiguous statement, you say quite clearly that you don’t support price controls, then construct an argument for when you do endorse them.

It is impossible to ever take anything you say seriously when you can just go back on it like this.

You might consider this: there is a reason you can’t remain coherent. it is impossible -your “arguments” do not and cannot make sense. You think practically every situation can be expressed using the nursery-rhyme level “not too hot not too cold” framework. You have no idea how markets work and yet, while changing your mind on the fly, you suppose to tell everyone else how things work. You are just a blathering idiot I’m afriad.

oohh that darn boogeyman free market lol

in the case of central planning
oh yes it does

You said, “It is indeed a very BAD thing, and if it’s a market-created situation, then some force outside the markets MUST intervene.” I took this to mean that you were in favor of price controls as a solution (leaving aside the minimum wage for a moment). Instead, you are in favor of inflating the money supply. Fine. I don’t think that it does much to change my argument that prices are the mechanism by which consumption and production are coordinated. Increased prices stimulate more production and discourage higher consumption. In the face of reduced supply, and in the context of wanting to see the poor (and everyone else) be as well off as possile this is EXACTLY what you want to happen. I don’t understand why you think that inflation in this situation is going to help.

“A well crafted stimulus program (which BTW we won’t be likely to see this time around) would include a jobs program for those of the unemployed who can perform manual labor.”

You mean make-work schemes, that take money from productive parts of the economy and throw them into less productive activities. And no, we won’t see “a well-crafted stimulus program”, or unicorns, or Santa Claus. They are fun to imagine, but sadly, they don’t exist.

“I know such arguments don’t make sense to you. All you see is that doing anything smart would be a distortion! ”

Left alone, markets tend to optimize. That does not mean that they are always optimal, but that they do trend towards optimal efficiency, and markets are complicated in the extreme with uncountable interconnections. Manipulating something as vitally important as the money supply will have a cascade of unforseeable effects , so “doing anything smart” is almost guaranteed to be very stupid in hindsight.

“Because once normal cash flow returns to the society, people are making enough money again to be able to pay every cent back to the Treasury in the form of taxes.”

When was the last time the government had a balanced budget? And kf you trot out Clinton, I’ll show you how the supposed “balanced budget” was really more of an accounting trick.

“Not necessarily. That posits that production does not also go up. Because when increased production keeps pace with increased consumption the supply/demand equation stays unchanged.”

Of course production goes up! And why? Because the price mechanism did it’s job, that’s why. In the short term, before new production comes online, the price will rise. Try to get one of the new 4G iPhones right now. The price is all over the place. Things will cool off soon enough as production continues and the demand for new phones starts to slow down, but for now, the real price is far above the retail price. That means that the truly desperate can get one off of E-bay for $1000, while others will jump through hoops (like my coworker, who stayed overnight at the store) or simply wait until the retail supply begins to keep up.

However I think your faith in private industry is also a bit misplaced. Who was it who facilitated the fraudulent sale of those tens of billions of dollars of tainted mortgage-backed securities? Wasn’t it the ratings agencies, that pronounced all those packages full of liar loans to be “AAA” rated?

You have to have cops watching the public so everyone doesn’t just decide to be robbers. And you have to have Internal Security personnel so the cops don’t go on the take. It would also probably be a good idea to have someone watching Internal Security.

So let me reformulate my position. I am against any price controls that interfere with the natural workings of markets to the extreme of forcing dislocations we can’t live with. Once again I find myself arguing the wishy-washy, relativistic middle.

A good example of extremes that damaged a market would be Chavez’s recent mandating of milk prices downward. What he was hoping to do was to make milk affordable for poor people, of whom Venezuela has an abundance.

Instead there was the unintended consequence that milk producers held their milk off the market, either stockpiling it in warehouses pending the end of controls (letting it go sour in the process) or smuggling it across the border into Colombia. So Chavez had to declare these producers and hoarders enemies of the people, prosecuting them and seizing their milk. It ended up a mess: everyone was unhappy and no one either drank milk or made a fair profit.

Here’s an example of a price control that causes no harm that I can see: our current minimum wage structure. I find no serious evidence that it either raises consumer prices to uncomfortable levels or discourages hiring. All it does is raise the standard of living for a small proportion of our workforce.

Were it to actually start exhibiting unintended consequences I would urge that it be lowered. A MW of $15/hour, for instance, would have terrible consequences throughout the economy. That’s why no one proposes such a thing.

What I am saying is the obvious, that forcing people by law to deviate from the price they could naturally offer/charge at any given time (given the other prices in the market place) is a decent definition of “price control”. This is exactly what your beloved minimum wage is.

So, your endorsement of the minimum wage is in direct conflict with your statement that you haven’t endorsed price controls. What gives?

So i guess I should ask, what “kind of definitions” do you mean? I didn’t define anything and so will have to ask you. What is your definition of price control then – as distinct from “”things that affect prices”. How do we establish if something is one or the other?

Before the regulation of food and drugs, we were prey to shysters and slick operators. And afterward, the worst you can say is that in time the FDA’s purity of purpose became corrupted by those same shysters and slick operators, who now had lobbying arms.