In a free market, an unemployed man has always chosen unemployment over working in a place, at a time, in a way, or for a wage that he dislikes. FULL ARTICLE by Ludwig von Mises
Source link: http://archive.mises.org/13211/catallactic-unemployment/
Catallactic Unemployment
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Tom Palmer is not pleased.
Ludwig: you articulate your argument like a man who’s never been unemployed.
“What causes unemployment is the fact that — contrary to the above-mentioned doctrine of the worker’s inability to wait — those eager to earn wages can and do wait.”
Right. You have a home, a car and two kids. If you haven’t had the time yet to start putting away long-term savings, you lose your job and start to panic. The mortgage is due in two weeks, well, that can go on your MasterCard. And the car payment, which you need to keep up so you can go out to interviews? Maybe do that one on the Visa. You don’t really have a lot of time. For many if not most of us, after two or three months you’re tapped out, with few resources to keep the household going.
Naturally, if Daddy is very well upholstered, you can ask him for a bridge loan to tide you over for the next couple of years. Maybe go back to law school. Wait it out.
“A job seeker who does not want to wait will always get a job in the unhampered market economy in which there is always unused capacity of natural resources and very often also unused capacity of produced factors of production.”
Only trouble is, the last couple of downturns have seen a shortage in precisely the category that most counts: consumer spending. In fact that’s exactly the reason why there IS spare capacity. No one’s buying. So no one’s producing. They all cut their staffs in half and wait out the slow patch, watching the door on a daily basis, to see if a customer wanders in.
How odd that they don’t just subscribe to Say’s Law. Then they could just run the engines wide open, flooding the market with Fords and washing machines. And the mere existence of such a shelf full of market goods would compel buyers to flock there and purchase everything in sight, using their nonexistent incomes.
But all those people who “choose” to be unemployed? Who choose to let their families watch while the repo team takes the Chevy, the furniture and the kids’ Game Boys? Why on earth are they so obstinate? It’s a wonder they had jobs in the first place, with that attitude.
Michael: you articulate your post like a man who’s never studied econ. Was there -any- argument in all that waffling of yours?
I describe a man, L. von Mises, who obviously never had any contact with actual unemployment. I think he must have been a lifelong academic, who’d muse in his study about what life must be like on the streets he never visited.
For such pontificators I have scant respect.
“For such pontificators I have scant respect.”
Delicious.
“I describe a man, L. von Mises, who obviously never had any contact with actual unemployment. I think he must have been a lifelong academic, who’d muse in his study about what life must be like on the streets he never visited.”
Obviously. To whom though? Maybe you should read his biography before resorting to sheer speculation. You’re out of your depth here.
About economics as an abstract entity, I’m sure he is quite learned. About the real conditions experienced by those who’ve lost their jobs, the man knows nothing.
Therefore he may be qualified to explain graphs and charts, off in the abstract realm. But he should not be commenting on people’s lives. Certainly not on how they’d all find work if they just looked hard enough.
Because you say he doesn’t? That’s rich…
Do you even know anything of Mises’s background?
Did you really just address your reply to Ludwig von Mises? You’re new here, aren’t you?
he could have swept streets or washed dishes. that he didn’t meant he could afford to wait for better things.
Mises actually had quite some trouble finding a job when he immigrated to the U.S., trying to get as far away from the war (WWII) as possible.
he could have swept streets or washed dishes. that he didn’t meant he could afford to wait for better things.
Mises had trouble finding a job? But that can’t be! He just finished assuring us that the jobs are out there waiting, if we just stoop to pick one up.
He had trouble finding a job kind of like Dalton Trumbo had trouble finding a job. That’s not the kind of thing he was factoring for here. Please refer to the third word of the article. Do lefties really not grasp the definition of the word “free”?
You don’t make your meaning very clear, person with an unusual name.
1. “He had trouble finding a job kind of like Dalton Trumbo had trouble finding a job.”
What sort of problems did Dalton Trumbo have finding a job? Is this something that’s supposed to be part of our store of common knowledge?
2. “That’s not the kind of thing he was factoring for here.”
Unknown meaning. Words, but no communication.
3. “Please refer to the third word of the article.”
First sentence of the article: “If a job seeker cannot obtain the position he prefers, he must look for another kind of job.” Third word of that sentence: “job”.
Okay, now what?
4. “Do lefties really not grasp the definition of the word “free”?
This carries the stench of class enmity. Snide sarcasm aside, I’m imagining that for you, in this context, the word “free” connotes that someone is free to fail. Or prosper. And that if he fails, no man is his brother. Nor need come to his aid.
Is this the sense in which you use the word?
make good samaritanism a legal obligation, is that your point?
I can see how you might think so, newson. But I’m not a great respecter of the law. Instead I’d concentrate more on a person’s moral fabric. And avoid business dealings with those I found to be offensive.
Of course that’s hard to do. Anyone handling money must deal with the money people. So my choice was to confine my affairs to working with the little-money crowd. And I was able to follow Ben Franklin’s advice, to neither a borrower nor a lender be.
Laws mandating morality generally don’t achieve the intended effect.
1. Try out Google, you’ll know faster than even you can type a smart-ass comment.
2. Piss off
3. My bad; the third word of the summary of the article above. “Free”, Einstein.
4. “Free” means “free”, consult a dictionary. The article is about what would happen in a free market.
My comment comes from the immense boredom of years of talking till I’m blue in the face to thousands and thousands of lefties. Now I just joke.
Another classic and inexplicable leftie blindness. I’m going to try out Gil’s method. Anyone can come to your hypothetical loser’s aid if he so chooses. Why would one *need* to? Is his big brother going to shoot him if he doesn’t come to his little brother’s aid? Why is it assumed that failure is always so bad? Why do lefties act like there is an economic pie which doesn’t grow, or as if there’s a cabal of righties gaurding a money tree (actually, that’s half right)? Why is it assumed most will not come to little brother’s aid unless forced to? Why is it assumed it is Big Brother’s real goal to do so (in any intelligent sense. You want to see how Big Brother loves the lowest and dumbest of the world, look at the State Lottery).
mpolzkill– There does seem to be a bit of class enmity in your comments. Has talking with ‘lefties’ really been that traumatic for you? Maybe it’s because you can’t actually hear them behind your walls.
1. In the realm of jobs, we really do have something of a ‘free’ market. No one forces businesses to add or to lay off workers. They decide such questions for themselves. And the result? A market where everyone really needs gainful employment… but employers everywhere try to minimize the number of people on their payroll. This sets up a dissonance, as the guiding forces in our economy try to force up unemployment, while everyone else hopes desperately that it will come down.
2. “Why is it assumed that failure is always so bad?”
Because failure to find enough income to keep your family going is indeed very bad. If you can’t quite picture this you might read a book. The one I’d recommend is David Shipler’s The Working Poor: Invisible in America.
3. “Why do lefties act like there is an economic pie which doesn’t grow..?”
The economic pie hasn’t grown, for employees. Over the past thirty years American productivity has increased nineteen percent. Of that sum the employers and owners have taken eighteen as personal profit. The workers who made such an increase possible? One percent.
So the reason we say such things is not theoretical. It’s demonstrable fact.
4. “..or as if there’s a cabal of righties gaurding a money tree (actually, that’s half right)?”
The cabal of righties guarding the money tree is more than just half right. If you’ve ever taken the time to track where new money goes once the Fed originates it, you’ll find it gets funneled to the major banking institutions. From there it gets LOANED to others. So this money does not exactly get showered on us. It becomes our liability to repay.
We are in debt. That is, all but the few. That’s why they deploy this ‘money’ in the way that they do.
It’s half true because if people would learn what money is we wouldn’t have such problems.
I say boredom, you call it trauma. Prat. You insult everyone constantly with your snide horseshit, I prefer a more direct approach. Not trauma: fun.
By your own description you’re a lightweight. I’d have preferred someone who could defend their arguments. But feel free to prance around.
Oh, definitely. I’m not any kind of economist. I’m not a from the Misesian tradition, I came to libertarianism from Spooner. I read him and woke up to the condition of the world 10 years before I’d ever heard of Mises.
But sorry, why would a heavyweight talk to you? You should try reading the articles more closely and take about 20 notches off your pompous and risible statements.
It’s so much fun watching newbs spew their arrogant ignorance around these forums only to be clobbered in the face by mpolzkill.
Poor Bala didn’t know what hit him. I credit mpolzkill for converting Bala’s position on anarchy, although Bala would never admit it in a million years.
I remember when Mark Hubbard first appeared I was thinking “I wish mpolzkill would show up and set this guy straight” … and then he did. The conversations were hilarious.
Now we have Michael … completely oblivious to who he’s dealing with. I cannot help but feel sorry for the guy.
Thanks Jay, I’m touched. My first goal really is to entertain. Spooner + nasty humor. Kind of a specialty audience, I know.
Ah, Bala, my very favorite. Not many straight men of his calibre come along. I miss Hubbard and Ackerman, too.
Jay Lakner,
You are wrong to say that I do not (or did not) acknowledge mpolzkill’s contribution to my change of stand to anarchism. I did as much to him directly. I do agree he is capable of something. However, I still prefer to call him what I do as I think it is quite an appropriate name. I do not want to repeat it (the name) out here as it is irrelevant to the topic.
That apart, you are also being extremely uncharitable as I was speaking honestly but was prepared to think and learn as I was posting (as I am still ready to). To call it “did not know what hit him” shows extreme childishness. You make me sad to think that I ever engaged you in a discussion.
Finally, I don’t think you guys have what it takes to take on michael. You completely fail to understand what lies at the base of his arguments (in turn due to fundamental weaknesses in your own epistemology, which in turn is no different’s from mpolzkill’s) and hence lack any intellectual ammunition to engage him effectively (and maybe even silence him). All the best in your (sure to fail) efforts.
Jay– Can it have escaped your notice that your beloved mpolz has actually offered no points? There’s nothing there to refute, to agree with or even to comment on. All he has to trade is a sassy style of prose.
I have asked him questions– which he does not answer. I have offered him arguments– which he ridicules rather than addresses What you revere is his pose, not his content.
If you’re in a position to offer real intelligence as to the true origins of, and remedies for, unemployment, why don’t you offer me a concrete response to my initial comment? The one beginning “Ludwig: you articulate your argument like a man who’s never been unemployed.”
“Now we have Michael … completely oblivious to who he’s dealing with.”
I’m dealing with a lightweight. And now, two lightweights. Knock me out with something relevant to the discussion.
Bala,
I know that I don’t have what it takes to take on Michael: hip waders.
Maybe there is someone with enough brotherly love, skill, patience and time to try to educate this guy who looks like he was told that he already knows everything. I doubt it.
- – - – - – - – - – - – - – -
That is true, Jay, and he acknowledged it regarding his former opinions on Israel as well. It probably just doesn’t compute for you how he can acknowledge these things and then call me mindless. Some people are just snobs against entertainers is my guess. My hero, Louis Armstrong, suffered in the same way, so I’d like to think that.
This is not a boxing match, Michael, there are no knockouts.
You *are* a crack up. That’s right:
“Ludwig: you articulate your argument like a man who’s never been unemployed.”
And you want a heavyweight response? Yutz.
Oh, and Jay is very formidable. You got it wrong, as per usual, I look up to Jay. He probably just doesn’t have as much time on his hands as I do right now.
mpolzkill,
” It probably just doesn’t compute for you how he can acknowledge these things and then call me mindless. ”
The conclusions you showed me about IP, Israel and Anarchy were pointers to logical errors starting from shared premises. The reason I insist on calling you a brain-dead monkey is that your “thinking” has got arrested at that level and, consequently, your cognitive development has not proceeded beyond that of the imitator. You have a way with logic and with words. That does not mean that your brain is working as a full-fledged human brain should. As I understand it, fully functional human brains start with percepts formed from reality as the base of their knowledge and then use reason to expand the range of concepts they hold. Your “ideas” are a set of free-floating abstractions that have no mooring in reality (the ideas do have a mooring, but you are blissfully unaware of them). Our agreement on the specific issues is, therefore, purely coincidental. My agreeing with you was a result of my understanding the errors in my own reasoning.
” Maybe there is someone with enough brotherly love, skill, patience and time to try to educate this guy who looks like he was told that he already knows everything ”
Aahhhh!!! Brotherly love!! That wonderful feeling that unites (or should unite) all of humanity.
Actually, I don’t think it takes much to break down michael. On another discussion, I did manage to narrow down the discussion to the core of his error. However, I just lost interest in engaging him any further as I had (and still have) more important things to do with my time.
So, all the best, once again.
Well damn, I’m one lucky guy then, Bala. I look forward to the day when you coincidently share my views on brotherly love. I won’t hold my breath though, the moorings you have to your ego are about as strong as they come.
” Well damn, I’m one lucky guy then, Bala. ”
Frankly, you aren’t alone. You have a lot of company out here. Your “monkey see and monkey do, the monkey does the same as you” epistemology is shared by a lot of people out here.
http://www.youtube.com/watch?v=IyCwFVIdkPg
mpolzkill,
Thank you for the kind words.
Bala,
I prefer it when you don’t concede anything to mpolzkill. Makes for a far more entertaining read. But yes, I do take back my comments. Let’s just say I added them for dramatic effect. I apologise if you were in any way offended.
Michael,
If you wish to know my opinions on the subject, read some Austrian literature. I have no desire to educate you on the entirity of free-market economics from scratch. I may add the odd comment here or there if I feel it’s relevant to the discussion but I certainly do not have the time or motivation to give you an entire course.
My advice? Download some books (they’re free), read them, then come back and point out the specific areas where you believe Austrian economics to be in error.
The following leads to a couple of books to get you started:
http://www.hacer.org/pdf/Hazlitt00.pdf
http://mises.org/books/mespm.pdf
Jay: Thanks for providing what I’ve been asking for for a long time here… a reasoned response.
I’m trying to download the Hazlitt now, unsuccessfully. Although my Adobe Acrobat is in the current version, I’ve tried your link twice and this one twice:
http://www.fee.org/pdf/books/Economics_in_one_lesson.pdf
In both versions, all I get is a garbled version of the table of contents. So I’ll have to go just with chapter headings, the only portions of the text I can access tonight.
II. The Broken Window.
I’ve never understood why people take this one seriously. Windows break. Repairing them is purposeful economic activity, the same as making new windows. In either case you start with zero useful windows and end up with one useful window. Verdict: pay the man. He did useful work for you.
The best example is WAR. War is the ultimate in broken windows. It destroys value everywhere, but it does provide jobs and income. So there’s a silver lining. If we had no war industries in America today, countless cities dependent on such earnings would go out of business. Naturally, I consider this a bad way to have to make a living. But it does provide value, in the form of both profits and wages.
IV. Public Works Mean taxes
V. Taxes Discourage Production
I’ll take these together. Yes, you can’t perform works, whether public or private, without having a source of funding. Governments are funded by mandatory subscription. Ergo, public works mean taxes. And yes, taxes discourage production, in the sense only that funds dedicated to taxes can’t be used for other purposes, such as production.
But production decisions hinge on many aspects. And predominant among these (at least in the minds of producers) is whether the products can sell at the desired price. Very often companies choose to operate in heavily taxed markets because that’s where the well-heeled customers are. They don’t move to Alabama, where taxes are nearly nil, because everyone there’s poor. They can’t afford to buy your stuff.
The logic on display in connecting those two concepts (wherein we’re led to believe that public works discourage production) is a bit like saying that (a) food is necessary for one’s good health. (b) Paying rent takes money away that could be used in buying food. THEREFORE (c) paying rent is bad for your health.
I hope when I’m able to find an intact copy of the book that that’s not what your Mr Hazlitt is trying to tell me.
Finally, X. The Fetish of Full Employment
It’s a bit more than a fetish. That’s the basis of a healthy society. Naturally if one doesn’t believe there is such a thing as society, he would consider this to be bunk. But such a being, not caring to be a part of the whole, would then be a parasitic growth on society. It would be in society’s best interest to eliminate such a being.
In fact much of what I’m hearing around here leads me in this direction. Most of you do appear to be antithetic to the goals of a healthy society. And seek earnestly to tear it down, replacing the body politic with the random motions of free unicellular organisms.
I will continue trying to dig up a copy of Hazlitt though. At least he’s giving a purportedly serious account of this philosophy.
michael,
” II. The Broken Window.
I’ve never understood why people take this one seriously. ”
That’s quite an admission of inadequacy. For starters, let’s understand the situation. Baker owns the shop. Shop has a window out in the front. Along comes a vandal and breaks the window. Shopkeeper is angry. Anger apart, he needs to spend money to REPLACE the broken window. You say “that creates profits and wages”.
That’s what you have seen. What about that which you have not seen or will never be able to see now that the window is broken?
If the baker is now replacing his window, clearly, he is spending money that he has to pay for it. What would he have done if the window had not been broken?
1. Spent it on something that he sees value in, in which case it creates jobs and profits in another line of the economy, not in glass window making.
2. Save it, in which case it re-enters the economy as investment.
3. Hoards it, in which case it has the effect of bringing down prices and improving real incomes
The important point to note is that in every option, everyone including the baker is well off as a result of these choices.
Let’s analyse the situation carefully comparing and contrasting the situation with and without the window being broken by the vandal.
Case 1.
Window broken – Profits and wages accrue in the glass window making industry and its supplier industries. Baker forgoes a portion of his wealth for no additional value.
Window not broken – Profits and wages accrue in the industry in which the baker decides to spend his money as well as its supplier industries. Baker forgoes a portion of his wealth for the additional value provided by that which he consumed.
Thus, well-being is greater when the window is not broken
Case 2
Window broken – Profits and wages accrue in the glass window making industry and its supplier industries. Baker forgoes the portion of his wealth for no additional value.
Window not broken – Profits and wages accrue in the industry in which the baker decides to invest his money and in its supplier industries as well. Baker forgoes a portion of his wealth for the returns provided by his investment.
Thus, well-being is greater when the window is not broken
Case 3
Window broken – Profits and wages accrue in the glass window making industry and its supplier industries. Baker forgoes the portion of his wealth for no additional value. So, the baker’s wealth has been transferred to those in the glass window making industry. Clearly, this cannot add to net well-being. The money spent by the baker may or may not remain in circulation and hence the effect on prices in uncertain.
Window not broken – Prices fall as a result of the hoarding by the baker (of course I a exaggerating the effect of one man’s saving, but extend it to the widespread avoidance of destruction that comes with avoidance of war) . As a result, real incomes move upwards. The baker still has his wealth and there is certainty of prices falling and more well-being being caused.
Thus, well-being is greater when the window is not broken
Which part of this are you still unable to understand?
” In either case you start with zero useful windows and end up with one useful window. ”
How nice it must be to be in blissful ignorance. I hope that is now dispelled. Just to reiterate what I said, you are completely incorrect when you say that in each case, you start with zero useful windows. In one case, you start with 1 useful window and end up with 1 useful window and nothing more. To top it all, someone has been impoverished in order for someone else to be enriched. In the other, you start with 1 useful window and end up with 1 useful window and 1 other useful product or service. No one is impoverished and everyone is only enriched.
” Verdict: pay the man. ”
The correct verdict : michael has a lot to learn.
Bala: I didn’t just fall off the turnip wagon yesterday; I have read the argument for Bastiat’s “broken window fallacy”. And it works only if you accept its premise uncritically, and don’t look for countervailing arguments.
Repairing broken items adds value in precisely the same way as does building new ones. In either case, the vendor replaces something that didn’t work, or possibly nothing at all, with something that does work. What you’re trying to convince me of is that the computer repair person, the auto mechanic and the handyman have no useful function. They add no value. And that’s an obvious error.
The argument that had the window never broken the person could have spent that money on something else is frivolous. We all have choices as to how to best deploy limited assets. And we may decide to have the chicken salad for lunch, as opposed to the hamburger. Likewise if we have a broken window, we may choose to pay higher AC bills until we get around to putting a board over the offending pane. Or, we can decide to fix it instead.
Jumping from the particular to the universal though, I find this approach to be a hallmark of people imbibing of the Austrian koolaid. Should they understand and be convinced of one argument, they believe that this precludes ever understanding or accepting any other argument. So prima facie, there can be no discussion. One is right, the other wrong. Spit spat.
To me, there are areas where a broken window argument can be applied. And others where it cannot. And, as a career fixer of broken things, I will have to differ with you as to whether such a career was of any value to my fellow man. Rehab work adds value.
Bala: On further examination I do see that something is troubling you: the fact that the window was broken by “a vandal”. This apparently changes everything, as human agency was responsible. I assume you would agree with me that if the window had been broken by, say, a tree branch or a high wind, repairing it would’ve been okay. Right?
But the vandal is really no different. Suppose instead it had been the homeowner, negligently playing with his Wii one day and breaking it with his elbow? Isn’t that still just one of those acts that happens in life? The window breaks. Then you have zero useful window. So you call the glazier, and he returns to you one useful window.
In neither case have you started with a useful window. The case under discussion posits that it has somehow been broken.
We do have one further scenario: malicious activity on the part of the glazier. Suppose business has been slow, and the person has bills coming due. So he goes out at night, breaks windows, and waits for homeowners to call him the following day to fix them. In such a case, he has first destroyed value, then come along to repair the damage. So in this transaction there has been no net gain.
This in fact used to be a trick resorted to by Amazon witch doctors. When business was slow and no one was getting sick, occasionally one would sneak out and put ugly things into people’s cooking pots. Then when the afflicted people would come to him to cure the resulting sickness, it’d be something he knew how to cure. And charge accordingly.
PS, I never did that.
“Bala: I didn’t just fall off the turnip wagon yesterday; I’m an intellectually dishonest propaganda artist.”
In the ‘further scenario’ of michael, there is a lost for the homeowner. Instead of having a window and, say, $60, they have now a window and no $60.
michael,
” On further examination I do see that something is troubling you: the fact that the window was broken by “a vandal”. This apparently changes everything, as human agency was responsible. I assume you would agree with me that if the window had been broken by, say, a tree branch or a high wind, repairing it would’ve been okay. Right? ”
See how quickly you reveal your inadequacies????
The “Broken Window Fallacy” starts with a vandal breaking the window and NOT with the accident of the window breaking because of a tree branch or something else. So, read first before you criticise.
” I didn’t just fall off the turnip wagon yesterday; I have read the argument for Bastiat’s “broken window fallacy”. ”
Ha! Ha! Ha! My reply (above) should show you how well you have read what Bastiat said. You are worse than I had imagined. You really did just fall off the turnip wagon yesterday, all your claims to the contrary notwithstanding…..
Incidentally, it wouldn’t take much to dispose of all your complaints, but it is important to realise that your “empirical” approach is hare-brained. And that’s being charitable to you.
michael,
This is one of the most hilarious ones I have read on the topic of the broken window fallacy.
http://dailyreckoning.com/vandal-economics/
Happy reading (and, hopefully, enlightenment)
Michael,
Whether or not the existence of window repairmen is good or bad is not in question here.
The important questions are:
Was the breaking of the window a good thing or a bad thing?
Did it “stimulate” economic activity or not?
Was wealth added to society or was wealth subtracted from society?
I’ll try to address most of your objections in one post.
Gerry: “In the ‘further scenario’ of michael, there is a lost for the homeowner. Instead of having a window and, say, $60, they have now a window and no $60.”
Fair enough. Let’s say the home has no window. And the homeowner desires one. So he goes to the window store with $200 and buys a window. Result: He now has one (1) window and no $200.
Therefore making and selling windows is not purposeful economic activity. Since the two sides of the equation balance, no significant gain has occurred. The logic is impeccable.
Bala: “For starters, let’s understand the situation. Baker owns the shop. Shop has a window out in the front. Along comes a vandal and breaks the window. Shopkeeper is angry. Anger apart, he needs to spend money to REPLACE the broken window. You say “that creates profits and wages”.
That’s what you have seen. What about that which you have not seen or will never be able to see now that the window is broken?
If the baker is now replacing his window, clearly, he is spending money that he has to pay for it. What would he have done if the window had not been broken?”
To me this approach is persistently inane. The shopkeeper has a need. He spends money to satisfy that need. It is unimportant whether he had a window once, but it broke, or he had no window but wanted one, or his windows were okay but he wanted some other thing. The point is that he created demand stemming from (a) a desire and (b) sufficient money to pay for it.
That’s the way the world goes ’round. If we needed neither food nor shelter, and could all subsist on lotus blossoms, we’d have no need for an economy. But we do have requirements. And one of those is that those things we possess grow old in time, or break. And they need repair. Fixing them performs the same function for us as throwing them out and buying new ones.
Jay: “The important questions are:
Was the breaking of the window a good thing or a bad thing?
Did it “stimulate” economic activity or not?
Was wealth added to society or was wealth subtracted from society?”
1. Neither a good nor a bad thing. It stimulated demand.
2. Yes.
3. Two parties to the transaction each gained by it. That’s the rationale behind all human commerce. That’s why one cave man made surplus sandals, while another one made surplus arrows. When they traded, both gained.
Thanks all, for your thoughtful critiques. No irony intended, either.
michael,
Since you are utterly impossible, let me word it a shade differently. Are you saying that breaking the window is beneficial to society because it “stimulates” economic activity? If so, why not just go around breaking shop-windows all over the place to give a boost to economic activity? And why stop at shop windows? Why not go around breaking computers, furniture, buildings, factories….. literally anything and everything? All that rebuilding must “stimulate” economic activity!!!! Why don’t we go around starting wars everytime the economy needs “stimulation”?
The point, numbskull, is that society is worse off because of the breaking of the window by the vandal. The well-being lost is equal to the value that the baker sees in the shop window. Prior to the act of vandalism, the value was there. Post-vandalism, it isn’t.
If you aren’t able to follow this, you really are the definition of “block-headed”.
” The shopkeeper has a need. He spends money to satisfy that need. ”
Numbskull… The discussion is not on whether he has a need or not. It is about whether act of deliberately breaking the shop window added to overall well-being. The answer Bastiat gives is ‘clearly not’.
” It is unimportant whether he had a window once, but it broke, or he had no window but wanted one, or his windows were okay but he wanted some other thing. ”
Since you are intent on demonstrating just how much of an imbecile you are, it is important whether he had a window once or not because what Bastiat’s theory of the Broken Window Fallacy explains is that destroying existing wealth under the guise of stimulating economic activity has a net adverse effect on human well-being.
That he had a window to begin with and in the end with in one case and a window and a pair of shoes in the other, thus leading us to infer that he is better off in case 2 while the other parties (window maker *2 or window maker+shoe maker) are equally better off in either case is the essence of what Bastiat had to say.
What is it in this that still fails to penetrate your extra-thick skull?
In the ‘further scenario’ (the broken window), the homeowner start with 1 window and, say, $200, and he finish with 1 window and no $200.
The window not have been intentionally broken (the not broken window), the homeowner could have buy ,say, a second window, so that he starts with 1 window and $200, and finish with 2 windows and 0 $200.
What is the best situation for the homeowner: to finish with 1 window and no $200, or to finish with 2 windows and no $200 ?
Michael really is invaluable. Look at him, he will probably never get out of economics kindergarten, however skillful and loving you teachers are. We all aways wonder why is it lefties can’t understand economics. We wonder what makes it so? Determination.
This is awfully pedantic. If you don’t think it’s worth the money fixing the window, leave it busted. That way you will avoid any unpleasant economic ‘loss’.
I was once asked to look at a low-rent apartment building, with an eye toward managing it. So I knocked on a door and asked the woman who answered if she had any complaints.
“Lord, yes!” she said. “The damn landlord hasn’t fixed this window since last winter.” And she showed me a broken window. So I said “You know, a pane of glass only costs two bucks. You couldn’t have just put one in yourself?”
She snorted like a bull in a pasture. “That’s not MY damn responsibility.” So I thanked her and left her to her broken window. Obviously, the principle was more important to her than the material improvement in her life would have been.
In your opening statement you assign equal values to a broken window and a whole one, that is, each one has a value of “1 window”. So I would leave you in the company of this irate tenant. Enjoy your window.
The question is not ‘do we must fix or not a broken window’.
The question is ‘is it more advantageous to intentionally break an useful window that is still in good shape, and repare it after, for a certain amount of money, or is it more advantageous to not break it, to keep it, and buy something else useful with this amount of money’.
Gerry Flaychy,
For once, I have to agree with mpolzkill. michael is truly priceless. He has given me so much occasion to laugh that my belly is aching from all the rolling over in addition to laughing.
Come on now, Bala, that’s not the first time.
Hugs and kisses, xxoooxoxoxxxxx
Yep, public schools created a healthy society and we want it all torn down out of pure spite. Will that be execution or banishment?
Did you seriously just use Keynes’s strawman of Say’s law in your argument?
Mises’s point is it is always possible (on the unhampered market) to find someone willing to employ you if you set your asking price low enough. However laborers want as much money for their labor as they can possibly get. How long they are willing to hold out and wait for a better taker depends on their savings and their time preference.
Well, Seattle & co., michael a perfectly valid point and, quite frankly, Mises got it wrong: a person cannot just wait around at their leisure for the ideal job in a free market environment.
“But no other imaginable social system could grant him a right to unlimited leisure.”
Wrong! The welfare-state allows a person to make this choice – because he can get unemployment payments. In a free market, if a new job was not immediately forthcoming, you would try to live off your savings, sell off your possessions, go penniless to a homeless shelter for basic handouts.
Gil, you did read the article didn’t you? Mises doesn’t say that a person can “wait around at their leisure” indefinitely. He says that when savings are used up people are going to have to accept a lower wage or change their job type.
As far as your welfare-state point Mises said “unhampered market” multiple times, which excludes the welfare-state as an option in this argument.
Uh huh. Maybe Mises had a romantic view about the society he was living in and didn’t notice there were payments for unemployed men to bide their time between jobs.
“Unemployment in the unhampered market is always voluntary.”
People can’t get fired, get sick or injured? Businesses can’t streamline or go belly-up?
“But, on the unhampered market, there is always for each type of labor a rate at which all those eager to work can get a job.”
By undercutting the person who is employed in the work you want to do?
“It is true that under the wages system the individual is not free to choose permanent unemployment. But no other imaginable social system could grant him a right to unlimited leisure.”
I repeat, and as michael points out, a person in a free market will be in financial dire straits if they get too choosey. The welfare-state allows the unemployed to be long-term choosey via unemployment benefits. Hence the welfare state is the best to system for a right to unlimited leisure. Note the romantic image that comes with the story it seems to depict two unemployed people and one is ordering coffee suggest unemployed people can be slack in searching for employment.
To suggest otherwise is the suppose people should model themselves after vagrants with little to no assets or long-term commitents or debts yet with sizable savings and can pack their swags and walk from town to town in search of employment they like.
“Uh huh. Maybe Mises had a romantic view about the society he was living in and didn’t notice there were payments for unemployed men to bide their time between jobs.”
I’m not sure what you are referring to here. Mises is not talking about what is, he’s talking about what would be absent government intervention, and I think you are referring to unemployment payments forced by the government. The argument he’s making is a theoretical argument, not one based in present circumstance….
“People can’t get fired, get sick or injured? Businesses can’t streamline or go belly-up?”
Gil, Mises doesn’t say that people will never be unemployed, he says they choose to remain unemployed based on their view of the lesser of 2 evils (getting new employment at too low a wage or in the wrong industry is less desirable than temporary unemployment).
“By undercutting the person who is employed in the work you want to do?”
Either by undercutting other individuals who could become potential employees, are already employees, or by choosing a different line of work than what you “want to do.” You make the choice based on your circumstance.
“I repeat, and as michael points out, a person in a free market will be in financial dire straits if they get too choosey.”
I never denied this and neither did Mises.
“The welfare-state allows the unemployed to be long-term choosey via unemployment benefits. Hence the welfare state is the best to system for a right to unlimited leisure.”
No objection to the first part, but I definitely don’t agree with “right to unlimited leisure” if you are saying this is something any system should promote. I don’t know what you are presenting this for honestly, again Mises isn’t talking about the “hampered” market caused by unemployment benefits which would explain longer term (but still voluntary) unemployment.
“one is ordering coffee ”
The image isn’t part of the article itself, it wasn’t in Mises book.
“To suggest otherwise is to suppose people should model themselves after vagrants with little to no assets or long-term commitents or debts yet with sizable savings and can pack their swags and walk from town to town in search of employment they like.”
This is a non-sequitur in my opinion. You need to present an argument to support your reasoning here. It’s contrary to the history of freer markets, so the argument seems not to be rooted in reality, and I’m definitely not going to try to decipher what kind of axioms you have that led you to this conclusion.
* Such theorising of a free market scenario is unnecessary – since an umemployed person isn’t making a claim on your income then it doesn’t matter.
* A person would in fact be longer (involuntarily) unemployed for health reasons than getting fired, resigning, etc., in a free market.
* Mises wrote “But no other imaginable social system could grant him a right to unlimited leisure.” Such a scenario isn’t automatic possible under a free market. Few people have the funds to “unlimited leisure” unless he means “sleeping under a bridge and relying on handouts from charities”.
* The only person in a free market who could quit his or her job on a whim and take a personal respite is a single young, healthy adult with no children or debts and the only personal possessions they have can fit in a suitcase or swag. Most people have various financial obligations that would ruin them in a matter of a month or two and be in the poor house and as such cannot just quit their jobs and hope a similar paying one is just around the corner.
So basically Gil just chooses to repeat everything in the manner of blind assertion when he’s got no argument left.
I repeated my points because Matt only gave me counter-assertions.
It is not always possible in the real world to set the asking price for your labor so low that someone just has to stop and snap you up. If it were, we wouldn’t be seeing unemployed country people showing up at the major intersections in town with tattered signs saying “Will work for food”, week in, week out, with no takers… as we saw in my neighborhood even during the best years of this past decade, when employment was at an all time high.
Besides, there is such a thing as a job that doesn’t fit one’s requirements. Our area is heavily into pharmaceutical research and production, a volatile category of employment where layoffs come frequently and in the hundreds of jobs at a time. If one has been making $140K and has a home, a car, private school tuition and other obligations that use up that budget, it’s obvious that he can’t replace his lost job by mowing lawns at fifty bucks a day. His family still faces a life on the street if he doesn’t find something better. And fast.
Unemployment benefits bridge that gap, preventing wholesale foreclosures and a collapse in the consumer end of the economy. So they’re a wise use of public funds.
Should our unemployed chemical engineer or biochemist be thinking of maybe switching to another field? Well, he’s very bright. Obviously he thinks of that right away. He knows his old job may not return for years. How many years of school do you think he might have to attend to become, say, a macroeconomist instead? And how would his family live in the meantime?
There’s a big difference in thinking about unemployment in the abstract, as I imagine most people here are doing, and thinking of it in the sense of an immediate personal crisis to which an answer must be found, and fast. It has been my observation that one only finds lazy lollygaggers during the good times, when jobs are so easily come by that someone can throw them away by not taking them seriously. Today everyone’s desperate for work. And the available lawns are already being mowed by millions of desperate Mexicans, already unemployed by NAFTA. I don’t think anyone can undercut their price.
Michael, your argument only convinces me of the need for something to cover these periods of unemployment. What that “something” is could be many things (private charity, individual unemployment insurance, individual savings, etc.)
It makes sense that you think that absolutely everyone must live at the utmost point of their income (and with a substantial debt load) since you seem to advocate the same on the government side as well, but there is the real possibility of people living frugally knowing that at any moment they could lose their job or might need to go find another.
Certainly no person can know the future, so no one should act as if his future is guaranteed.
Provided that the person is unwise and lives consuming all his funds I’ll agree that for his family/etc. there should be charity in many cases, and it is up to his fellows and local community if they want to provide such assistance.
What I’ll definitely not grant is that the scenario as you’ve posed it means we must have a substantial welfare state where you assign the government to steal from those who have lived frugally to support those who didn’t wisely save.
You continue to display some persistent misconceptions of what I’m saying. I’m trying very hard to be unambiguous.
“It makes sense that you think that absolutely everyone must live at the utmost point of their income (and with a substantial debt load) since you seem to advocate the same on the government side as well, but there is the real possibility of people living frugally knowing that at any moment they could lose their job or might need to go find another.”
In a word, no. You confuse an observation with a mandate. In our culture, in periods of economic upswing, people have the choice of either living within their means, on a very typical $25-40K a year, and bringing up the kids in a tiny 2BR apartment on the third floor, or living the way they think normal people should live, availing themselves of some of the credit being abundantly extended to them by the moneylenders.
They share a common optimism, that either they’ll never be laid off because they’re “good workers”, or that somehow “something will turn up” if things ever do go south. Thus they are unprepared both psychologically and financially for family adversity. And it occasionally comes their way, ruining credit and lifestyle as they have to move out of the home they’ve paid so much money into, “choosing” instead to live in their cars until “something turns up”. It’s their mistake, but our concern as well. Because we have to live with the results.
Do I advocate this approach, living on the margin? Hardly. It’s more in the nature of an observation I make about human nature.
So what’s that to you or me? Aren’t we superior to all that? Why should we worry if other people do dumb things? No man is my brother, that’s his affair. Right?
Not really. Just as I’ve said we support public schools, not to educate our kids, but to educate the kids of others, we also (if we’re wise) put in protections against common catastrophes that many people fall into. It creates a society we might want to live in, instead of the default jungle we find in so much of post-industrial America.
The reason they made Social Security mandatory is they knew most people might be too dumb to take out the insurance. And they’d still “retire” broke, eating dog food in cans. And the reason they instated unemployment benefits is they knew many of us were not making enough money to both put some aside for a rainy day and achieve their idea of minimum material standards. So I think such programs have been both well designed and effective for the majority of Americans.
If unemployment were ever made mandatory employers would no longer contribute. And it would be more expensive. A head of household choosing between, say, having their transmission repaired so they could still get to work and maintaining a current policy against unemployment might well be swayed into acting against her own long-term interests. Of necessity. So I like it being mandatory, the law of the land.
But I also like everyone having as much liberty as they think they require. So let’s compromise. Everyone thinking the benefits and protections afforded by the US government should be able to continue living under it, unimpeded by the activities of the wreckers. And everyone unwilling to live under those onerous terms and conditions should freely be allowed to emigrate and form their own free state, where every man is an island and no one owes his fellow man a damned thing.
Is that not the libertarian solution?
My God, what tripe.
You don’t know what public schools are really for, that’s because they did such a bang-up job on you.
This one just kills me:
“The reason they made Social Security mandatory is they knew most people might be too dumb to take out the insurance. And they’d still “retire” broke, eating dog food in cans. And the reason they instated unemployment benefits is they knew many of us were not making enough money to both put some aside for a rainy day and achieve their idea of minimum material standards. So I think such programs have been both well designed and effective for the majority of Americans.”
Can’t have some people blowing their possible savings, we must have the State blowing everyone’s savings.
You’re such an ignoramus there’s no way to start with you, but no, that’s not the solution. D.C. may leave me alone and I’ll stay where I was born. And they may leave Lakotah and Hawaii and Iraq and Afghanistan and Switzerland alone, for that matter. This is not going to happen though, of course, because of the millions of formidable outposts they have erected in millions of stunted minds like yours.
mp– I sense that you have some issues.
Well sure, by definition I’m not as adjusted as you are. Stick a cow in a cage and stick a lion in a cage and see which one becomes more adjusted.
Michael,
If you implement policies to protect citizens from folly, you will create a nation of fools.
Jay– The rules of the game are there to protect the sheep from predation… not from folly. Public education is what’s supposed to protect them from folly.
And it’s done a fantastic job at that hasn’t it?
mpolz: I’m starting to see how you got to where you are today. You sound like an old hippie radical, angry with The Man.
I agree with quite a lot of your positions, too. For instance we both understand that the current wars we’re in were started for profit and power, not for the reasons the public was given. And public education, like nearly every institution in American society, has been perverted by believers of one sort or another, with a mission to fulfill.
But when you say something like “You don’t know what public schools are really for, that’s because they did such a bang-up job on you” you’re analyzing the institution simplistically. The public schools are like the elephant being examined by the wise men. To some, like me, they are there for the purpose of teaching critical thinking skills, so people can be savvier and more resistant to propaganda no matter what its source.
And to some (also like me) they are to prepare rebellious wild hairs for a life of drudgery. This sounds bad, but it’s a fact that the rebels have no place in modern society… unless they’re able to capitalize on rebellion and somehow be able to turn it into income. So I appreciate those few rock & roll idols who can act like wild men and get paid for it. But sadly, most wild young delinquents end up very far “out of the money”. They become also-rans.
They’re better off having a few rough edges knocked off so they can become employable. And public schools don’t do nearly enough for the kind of kid who drops out at 16 because he’s bored. No one took the time to tell him his choices involved being bored and broke all his life or being bored in a job that paid something.
Vital coursework for the non-college-bound individual should include a course on household finance… so he or she can calculate a budget and figure out a way to stick to it… so they can calculate the real cost of personal credit… and so they can prepare themselves for ways to qualify for a home, a car or any other major purchase. This, right now, is done in all too few schools.
So it’s not there just to break the young mules to the whip… although in fact that is one of schooling’s functions. And if every parent was of a quality that they could adequately teach their children themselves? Then we wouldn’t need public schools.
But right now, we do. 3/4 of the public never graduates with a bachelors degree. Something has to be done to show them their true options in the society we have… because it takes too many years for each of them to figure out such life lessons for themselves.
On a lesser note, you say “Stick a cow in a cage and stick a lion in a cage and see which one becomes more adjusted.”
Cattle don’t do well in cages, or in any environment with a hard surface. Cattle are only happy on grass. Cats, on the other hand, whether large or house size, take immediately to a life of leisure… so long as the meals come regularly.
Yikes, you’re starting to sound like Carroll Quigley.
You didn’t go to one of the lowly public schools, did you? Our betters are rarely so foolish to send young master there.
- – - – - – - – - – - – -
You got that right about the house cat. World class cage for the cow, circus cage for the lion.
And HIPPIE?!? A fresh mortal insult. No, here I am in verse and pantomime:
http://www.youtube.com/watch?v=e7cry-4pyy8
“Yikes, you’re starting to sound like Carroll Quigley.”
I hope not. I know I’m wordy, but that guy needs a couple of hundred pages just to get up to speed.
“You didn’t go to one of the lowly public schools, did you? Our betters are rarely so foolish to send young master there.”
Sure did. But my education really came at the hands of my parents. I was raised by grownups, and only started going to school late in the game… after I’d already learned a few things. It’s an old New England tradition.
“an old New England tradition”, like sticking one’s nose in everyone’s business.
Yankee go home.
It is not always possible in the real world to set the asking price for your labor so low that someone just has to stop and snap you up.
Again, Mises is talking about un unhampered market. In an unhampered market there is no law that sends people to jail for hiring you if you set your asking price too low. What part of this don’t you understand?
Unhampered market is a key phrase.The U.S. economy is hampered in many ways, therefore the theory is not entirely applicable to the American or European economies.
«Catallactic unemployment must not be confused with institutional unemployment.
…
The treatment of institutional unemployment belongs to the analysis of the problems of interventionism.»
Mises, at the end of the article.
We need to put more emphasis on the role of the capital markets in unemployment. As Mises said, in a free market there is “unused capacity of the factors of production”. A recession is a disequilibrium of the factors of production, with most of the higher-order capital stock being discovered as worthless, and the workers attached to it thus become unemployable. Even if wage rates were allowed to fall substantially by a suddenly enlightened government, if no capital is invested in reaction to lower wage rates then some workers will still be unemployable.
We cannot all become taxi drivers unless more taxi cars become available. The “recovery” part of a recession is the part where more lower-order capital goods are produced out of liquidated higher-order capital goods. This necessitates investment and a pro-capital governing regime. As the former CEO of Intel said this week, America now has an anti-capitalist regime while Asia has a pro-capitalist regime, and so all large-scale investments are offshored to Asia while only the smallest, most elite organizations can form up in the USA, with barely any capital invested.
“We cannot all become taxi drivers unless more taxi cars become available.”
Not really, Darcy. We have plenty of cars, in fact “previously owned” prices are dropping because so many of us are trying to sell them. The reason more people can’t become cab drivers is because we don’t have more RIDERS.
You need fares to make a living… and when there’s a constant number of fares your share just drives down the number every other cabbie is able to find. You can’t just set yourself up as a gypsy cabbie and pull down income. That’s why taxi operators like to control the numbers of people authorized to be in the business, forming professional associations to limit entry.
Supply and demand, bro.
Then find another avenue of providing yourself with income. Supply and demand, “bro”.
BTW how could you be so obtuse as to UTTERLY miss his point and go on what is in truth an irrelevant rant?
Be so kind as to spell out his point. This is what he said:
“We cannot all become taxi drivers unless more taxi cars become available.”
And that is what I addressed.
Um, what’s objectionable about it? Without the requisite capital you cannot be a taxi driver. What did anything you say have to do with this?
Most Americans can get it together to get some kind of car. That’s not the limiting factor. FARES, though. They are the limiting factor.
“unless more taxi cars become available” is not the same thing as “unless more cars become available” in an environment in which, in order to provide a taxi service, you have to have a special license from the state. “Fares” are not the issue at all.
Peter: Why not settle the matter to your satisfaction? Should you live in an area that has actual taxis, find a driver and ask him this question: Do you believe taxi drivers should be licensed? Or should this activity be unrestricted.
I’ll go with the answer he gives you.
Then go to Detroit and ask an autoworker what he thinks about the Japanese.
“Do you believe taxi drivers should be licensed? Or should this activity be unrestricted.”
And while we’re at it, let’s establish once and for all whether turkeys are for or against christmas.
Great suggestion Michael, surpassing even yourself on the nonsense-ometer.
“Even if wage rates were allowed to fall substantially by a suddenly enlightened government, if no capital is invested in reaction to lower wage rates then some workers will still be unemployable.”
why? ultimately every body owns their own body and can use this to produce income at some level. maybe it’s as humble as cleaning or weeding gardens or cleaning gutters. but there’s never any shortage of work…at some price.
See my post above, newson. The state I live in is little different than most. The markets in yard work, gutter cleaning, car washing and odd jobs are all hyper-saturated. Bottom line: we have more needy people than openings. At every level of employment.
That’s why wages are low. It’s the labor application of the law of supply and demand. If WalMart has an opening for one greeter, there are hundreds of applicants. People are that desperate.
Don’t believe me? Try it yourself. Go around your neighborhood knocking on doors. Ask people if there’s any little thing they need done. See what they tell you.
Michael does sort of have a point. Mises’ work would only be of extensive value in a world of adults, not in this one. Is it possible that Michael is correct that a huge percentage of people are absolutely incapable of growing up?
What are you talking about? Are you looking forward to an idyllic where you could have 100 servants in your home for $50 a day? Do you wish you could go to Africa and round up a whole village to work in your home for a pittance?
Gil, why are you making up yet more crap with no economic theory behind it? Why?
Some people here are getting misty-eyed that without the minimum wage, wages will become so cheap they’ll finally get their own team of servants.
mpolzkill– Thanks for sort of, somewhat, coming to my aid. But if we’re talking of some abstract world that’s nothing like the real one, why are we wasting our time? This is the world we live in and deal in. And if this peculiar brand of economics has any relevance, it must address the issues raised by the way this world operates.
I’m trying to think of what you might mean when you say this world is full of children, incapable of growing up. Do you mean people who rely on having a job? That would be the mass of men. Women, too.
Most of us don’t like the bother, nor do we have the talent, to go out and invent our own business. The business owner works twice as hard as any of his workers and takes on all the risk. It’s not one’s first choice, for most of us. Not unless we have an attitude about doing some other person’s work. So we grow up hoping to join the work force and make our contribution to some enterprise larger than ourselves.
And we arrive, most of us, expecting to be treated fairly by our employer. Naively, most entrants into the work force expect to do “an honest day’s work for an honest day’s pay”. And the first time we’re screwed over by a boss with a different set of ethics, we get over upset. But gradually we learn to live with it, and lower our expectations to fit the reality.
I recently visited Binghamton, NY… a town employment left behind years ago. It’s full of poor people, shabby homes and boarded up factories that must have been bustling back in the seventies. It’s been so long since there have been any jobs there, the teenagers have the look of people who never expect to have a job. And that, to me, is a sign that our country has been gravely mismanaged. The thread has been broken.
The flaw I find in looking through the Misian lens is that it solves our economy for a fairly trivial factor: the stability of the dollar. Instead, the obvious way to approach our societal task is to solve the equation for full employment. This would elevate the quality of life for all of us, not just make certain that those of us who won big would be able to keep their winnings intact forever. Or so it would seem to me, as a human being.
So I think what you’re saying here, “Mises’ work would only be of extensive value in a world of adults, not in this one”, is that Mises’ work is irrelevant to the world we live in. And I would concur.
Yes, not being Viennese of the fin de siecle, a rightie (a gentle one) or a super-genius like Mises, I can only really identify with him in two ways: his intractability and his depression over being a superfluous man.
The idea the fellows at this Institute have is to educate you and the rest of the billions of superannuated children. I don’t share their wild hopes, and you are a marvelous reminder, should I ever become as giddy again. Thank you.
After having looked into his thoughts and opinions fairly briefly, I can’t quite picture this fellow as being “super-intelligent”. Even bringing myself back to the time in which he wrote, his world view is extremely restricted. He’s a bit like Freud, only qualified to comment on the realities of his own small circle of acquaintances. He has not seen much of the world, and so has freed himself to imagine great generalizations about the nature of what he believes to be reality.
He reminds me even more of Marx, and Marxism. Not just his grandiose way of making sweeping statements. It’s his acolytes, who worship the ground he walked on and who accept prima facie that any argument refuting the Great Guru’s words must be wrong.
Beware the inerrant teacher. He’s very often either a scoundrel or a dunce. And he urges you to believe there is ONE grand, sweeping explanation of everything. Whereas life itself is untidy. And no amount of explanation will suffice to describe it.
Every now and again some ignoramus possessing a stunning arrogance shows up here and hangs around for awhile, but you, you are really something special.
You keep forgetting, as others have tried to point out to you, we are so far away from a free market that none of us have really experienced it. We pay the price when propped-up industries and markets fall apart – the boom and bust cycles created by intervention result in the suffering you are describing.
The markets and industries you describe depend primarily on consumer income. Or, barring that, access to consumer credit. Government subsidies don’t play much part.
I will grant that real estate bubbles are caused primarily by lowered interest rates. When mortgage rates go down the consumer can afford to pay more. And as a direct result, home prices go up.
But even in the absence of a Fed to dictate interest rates, whenever most of the available money is in the hands of banks and not people, rates will go down. Again, supply and demand. Your close study of the actual housing market would be amply repaid , I think. It explains a lot about how we go in the directions we go, in terms of savings, debt and questions of full employment. It’s the most expensive purchase most of us ever make, and at the same time usually the largest savings account we own. It’s our national store of wealth.
michael, my lifeboat buddy, it gladdens my heart to read your posts here at Mises.org. You are persistent, and that is what it takes since there are so many minds and so little change. You may be on to something. From one of your previous posts, somewhere scrolled up and off my screen, you said something referring to ordinary people “… availing themselves of some of the credit being abundantly extended to them by the moneylenders”, and just now “… bubbles are caused primarily by lowered interest rates”. I think this is serious stuff, don’t you? That’s why I myself keep coming back to this site. I really want to understand just how it is that lending money can cause problems. It is not obvious, to me at least. I have to set aside all the comments about governments being bad and all, because those comments are really not helpful when I try to consider this money lending thing. Excuse me if I seem to talk down to you, but I realize that there may well be a thousand other people who will read this and I mean no disrespect to you. What I have learned so far about Austrian economic theory is borderline boring. It seems to be all about bankers lending fiduciary money. This should be called “funny money” instead because when I try to explain it to my friends they all start laughing — at me! They just don’t think I am trying to be serious. To a one, they all think that the bank takes in deposits and lends out the money for just a little higher interest rate, like they pay the depositor 3 percent and then lend it out at 6 or 8 or 10 percent, or something like that. When I try to explain that it is not really like that, that the banker lends out that money 10 times and instead of only 3 or 5 or 7 percent they make a return of more like 20 or 30 or even 50 percent they think it is I that is addled. I can’t even get started trying to explain to them how thousands of bankers, each acting independently from all the others, bid down the interest rate in the effort to lend out as much money as they possibly can. In doing so they facilitate borrowers in their efforts to achieve their dreams but the result is actually so many of those dreams, and the dreamers, are smashed and broken. All at once, and with no warning. Austrian economists talk about entrepreneurs extending the production chain so they can produce more stuff cheaper and make a profit, but it is really just people trying to make a better life for themselves just like the “little people” when they borrow money for that room addition or renovation, or the tuition for the university. I can understand your dismay about the high rate of unemployment, I too share that. But so far I have not been able to find anything in Austrian economics that is an easy prescription to end all the misery that has been brought on by all the lending of that which does not exist. All that I can find on this site is the nostrum that artificially low interest rates cause a multitude of problems, so don’t do that, mess with interest rates that is. Seems simple minded and not helpful to those of us who are natural interventionists, which is all of us, really. I hope this has been helpful, but if not, thanks for reading.
Cordially,
Don
Don, I can’t tell you how it cheers me to read someone who’s actively thinking, and not reiterating theory.
“.. you said something referring to ordinary people “… availing themselves of some of the credit being abundantly extended to them by the moneylenders”, and just now “… bubbles are caused primarily by lowered interest rates”.”
Abundant credit’s a good thing. It’s a stimulant, an economic stimulant that makes our consumer dollars go further. And as such, it promotes full employment. But like other stimulants, there can be too much of a good thing. A cup or two of coffee in the morning can help make one’s day more productive. But six cups by noon aren’t always beneficial. And running through five thousand bucks of coke a week can make a young bond trader perform miracles… for a while. Then events take their inevitable course.
The same with household credit or national credit. Once it has done its work and the patient is healthy and alert, it’s time to pay the piper back. Or, as has famously been said, when the party gets to rockin’, it’s time for the hostess to put away the punchbowl.
I consider that to be adult behavior. However, sadly, we are both a nation of non-adults, wailing children who perpetually must have their needs met, and a democracy: one whose leaders are chosen by popular acclaim. This fatal combination brings us low, incapable of properly managing our own affairs. And it’s a condition our Founding Fathers warned us against. They said that education would be necessary so we could learn how to handle the great tool of democracy properly.
During the good times, around my part of the country, we saw the rise of payday lenders. This industry was created to service people who just weren’t making enough money to get by. Every pay period, they’d run out of cash before payday. Manifestly, there was a great need for such a service. But anyone with half a brain could see there was a flaw in the system. In time, all those short pay periods add up, and the individual just can’t pay his bills any more.
No problema for the lenders. No one knew this lesson better than them. That’s why they charged such high rates. By the time the mark had to default, they didn’t need the principal back. They’d already made much more than that on his interest.
We also see a lot of car lots that advertise “Bad credit? No problem!” Same principle. By the time they haul their car back to the lot they’ve made their target income.
I think there’s a lesson there. One concerning the necessity of financial literacy, and the value of a proper education.
Don, a couple of further points, one trivial, one fundamental:
First, “Excuse me if I seem to talk down to you, but I realize that there may well be a thousand other people who will read this and I mean no disrespect to you.”
You may come to find I’m not an Austrian at all. Not even an impostor. Strictly a monetary Turk. So it’s not me you’re talking down to.
But second, there’s this whole idea of fractional reserve banking. And I have a little problem with that. Because you can’t just lend out the same ten dollar bill again and again. You lend it once, the guy spends it. Then it’s out of both your hands.
You then have to go back to the well for more. And the banks we know as the Fed’s biggest customers all line up at The Window. That’s how the fellow who borrows ten from the Fed loans it out and magically has another one to lend the following morning.
Explain to me how this isn’t so. Because I do know it’s not that hard to become an accredited BANK.
http://en.wikipedia.org/wiki/Bank_holding_company
If this was just a license to print money, as fractional reserve theory appears to imply, I think there’d be a lot more banks out there just printing up certified checks for a million bucks, and putting them to work out on the street.
Finally, a footnote: “All that I can find on this site is the nostrum that artificially low interest rates cause a multitude of problems, so don’t do that, mess with interest rates that is.”
There’s no such thing as an “artificial” interest rate. Only people with money to lend get to set rates. The Fed, by law, can invent money to lend. So they get to set their own benchmarks. And they’ve figured out that the lower the rates, the more popular they are. When rates go up, business gets cramps and fainting spells. And real estate values go down. So in recent years they’ve been setting their rates, IMHO, a wee bit too low for our long-term health.
michael,
Thanks for your considerate reply. I will, with (too) many words, respond at a later time, likely on some other thread.
Don
You still need a rake to clean gutters.
You can do it without the rake. But you do need a ladder.
What I find hardest to believe is that some people seem to be struggling with this extremely simple concept.
In a truly free market, involuntary unemployment is virtually non-existent. (The only exceptions are people so injured or ill that they cannot provide any meaningful service)
If a society experiencing mass unemployment were to suddenly and immediately return to a free market, what would end up effectively happening is that all wages across the board would be reduced. Rather than hire one man to do a job at $10 and hour, employers hire 5 men to do the same job at $2 an hour. The job gets done much quicker and the extra productivity translates to extra profits.
Think about it. If there are a lot of desperate people floating around, some clever entrepreneur will round them up and make use of them. With labor being extremely cheap, all manner of business opportunities would arise which were previously unprofitable.
There was a time when petrol stations were not self-serve. They were called service stations back then (I think in some places they still are). You’d drive your car in and someone would greet you and ask you how much petrol to put in the car. Then they’d wash your windscreen and check your oil, etc, etc, etc. Why do those jobs no longer exist? Because the government made them illegal by raising the minimum wage above the wage required to make that job profitable. Rather than raising those employee’s wages, the government made those employees unemployed.
If we returned to a free market, we would see all these kinds of jobs return.
In a free market voluntary employment would be non-existent. If someone were to lose their job they would have to live on savings. So you two weeks worth of saving then what? You quit your $50,000 a year job to find you can’t get a similar paying one. Uh oh! Suddenly you realise the easiest to get jobs pay $50 – $100 a week (or $2600 – $5200 a year). Uh oh! You can’t pay your mortgage and your bills. So you have to sell everything and live in the slums which is the only affordable housing for such a low pay. Either that or become a bum and live off what ever you can get from charities. Somehow I doubt very few people have enough saving or investments to have an extended hiatus let alone have unique skills where they can return to the workforce after an extended hiatus with a high-end salary.
They have a cave troll.
Prove that this would be the outcome, praxeologically.
BTW this sounds like those millionaires who think they could not “Possibly” live on anything less than a few hundred thousands of dollars in income a year, it’d be “unthinkable”. Rofl.
So you just proved the outcome you denied I said might happen? Yes, a millionaire might just go broke and work for a $10 a day in a free market environment and they can’t back on track to whatever process created their wealth. They’ll learn how to feed themselves on a couple of dollars a day. In time they’ll forget they “could only live on more than $200,000 a year”.
Ugh, because I mentioned it sounds like a certain kind of person, this counts as a praxeological proof? No wonder you struggle to understand this site…
Huh? Conservely a starving family of Africans would happily work in the U.S. in exchange for food, clean water, clothing and a place to sleep. Is it surprising Mexican immigrants hate locals who seem to expect a highish pay (“Gringos don’t want to work!”).
“In a free market voluntary employment would be non-existent.”
All employment is voluntary (unless some Pol Pot figure is holding a gun to my head and forcing me to be a farm hand instead of a teacher but then that is not employment is it?) Even if I am choosing the best of bad choices…I am still making a choice. Therefore, your premise is wrong.
The fact that people have only two weeks worth of savings (in your example) is not a condition of society but an outcome of an inflationist/entitlement government which has misled it’s people (many who are ignorant of history and economics) and attacked those who have attempted to be responsible by devaluing their savings. As my mainland Chinese girlfriend pointed out to me-the reason the Chinese have such large savings (35% vs. 0-6% in the U.S.) is because there is no health insurance and no retirement…people prepare for the inevitable if given the choice.
And last, most people making 50k a year probably have decent intelligence (formal education or not) and would not just quit their job (especially if they have debt, property and other responsibilities like children). Though I will admit about 15 years ago…I did just that…I quit my job…but I had no debt, no property, no children, and had savings.
Gil, I mean not insult to you but your post sounds slightly Marxian or perhaps your unemployed and frustrated…if so, I am sympathetic…but I can’t agree with your premise or examples.
Puhleease! A lot of people believe in owning their own home and getting married and having children. Such a lifestyle requires debt.
Which is an article of faith really.
These are voluntary choices – a lot of frugal people do these things and save money each month. Too many people get over extended and then expect someone to bail them out. Make poor choices and you may suffer for awhile.
BTW: Which Chinese save 35% of their income? The rural poor or the urban well-to-do? Besides is the renminbi a stable currency or is it manipulated as much as the U.S. dollar by the central govenrment?
Employers are not suddenly going to hire 5 men at 2$ an hour because you are not, once again, factoring in the cost of capital to invest in training these men. If the marginal productivity of the worker is 12$ an hour, only one worker will be hired and trained to reach this productivity. The overhead costs will be minimized. That there remains a surplus of labor is irrelevant – the surplus exists because there is a shortage of capital!
People must be invested in before they can become productive in some work, and this investment does not carry over to other lines of work. This is why there can be a shortage of skilled, experienced labor during a recession. During the boom, workers were earning experience to become productive in the wrong lines of work.
“Returning to a free market” in this case can mean only one thing – a full free market, tax-exempt, on capital investment.
By “free market” I pretty much mean that the State no longer exists.
And it should have been clear from my points that I was refering to industries which do not require extra capital equipment, such as many farmhand jobs, trolley collectors, service station attendants, cleaners etc, etc.
Imagine hiring four cleaners to clean your house rather than one.
Imagine classroom teachers having 3 assistants.
Imagine 100 people picking rockmelons rather than 20.
Imagine someone polishing your shoes, while you get your hair cut.
The list is endless.
Who would supply the cleaning equipment?
Who would drive the assistants to the school?
Who would manage the rockmelon pickers?
Who would train the shoe polishers not to destroy the shoes he polishes?
You are not factoring in the scarcity of capital goods.
The regular cleaning equipment is shared 4-ways.
The assistants pay for their journey to the school from the wages they earn.
It’s a 10 second demonstration to teach the pickers what to do.
The costs of training are subtracted from the polisher’s wages.
Honestly, I have no time for nit-pickers who completely miss the main point and get hung up on irrelevant details. The costs of employing additional workers in these examples is so small they are negligible.
Some job’s have virtually no capital requirements.
How interesting you presume that wage problems will be solved by people paying little. This sounds little different from the Marxist concept of job-sharing. Besides what happened to “too many cooks spoil the broth”?
So many questions, Gil. Always with the questions. There is one answer you should contemplate if you could: you’re a moron.
Gil actually makes a very good point here, what many libertarians preach in response to unemployment is the same as the Marxist proposition of job-sharing. The market, in disequilibrium, does not apply this because there is not enough capital to invest in training everyone to share the same job, when training a single worker will suffice.
Darcy: Three of your points cry out for some clarification.
First, you say “That there remains a surplus of labor is irrelevant – the surplus exists because there is a shortage of capital!”
I’ll grant you that companies today are likely to be constantly borrowing operating capital rather than operating from earnings– but still! If they’re making money aren’t they likely to keep their workforce, as it forms the basis of their profitability? You can’t say that a company voluntarily downsizes itself just because investment capital is drying up. They only make that move when sales are down.
Second, you say “People must be invested in before they can become productive in some work, and this investment does not carry over to other lines of work. This is why there can be a shortage of skilled, experienced labor during a recession.”
But the recessions we’ve been experiencing manifest themselves by existing workers being laid off. Why then can’t employers just hire them back? It would require no training.
Third, “Returning to a free market” in this case can mean only one thing – a full free market, tax-exempt, on capital investment.”
Why should investment income be tax exempt? Aren’t we awash in investment income already?
You and your fellows here appear to have as your paramount concern the potential for inflation, with the expansion we’ve seen in the money supply. And consider it a priority that we return to a situation of budgetary and monetary balance. Yet there is no price inflation in ordinary consumer purchases… because the consumer-employee has seen no increase in the share of total dollars he has access to. Meanwhile there have been humongous price bubbles in investment assets… because that’s where all the money has gone! Virtually ALL those new Fed funds that vex us so have gone to the rent-seekers… not to the workers.
THEREFORE: it would make more sense to adjust the tax codes in favor of labor income, as working people haven’t seen a share in any of the wealth their efforts have helped create. While the holders of investment capital have already seen an overwhelming amount of this inflated money come their way. So if we are to return to a state of fiscal responsibility, via fair and equitable tax collections, it would be more appropriate to tax investment income MORE rigorously than wages.
Your response would be invited.
“In a truly free market, involuntary unemployment is virtually non-existent.”
Jay– This is an imaginary world, right? So why are we talking about it instead of the real world?
Here’s another one: What does this world look like? Is everyone intelligent, capable, independent and Austrian? Do they all want to be entrepreneurs? Do they all ascribe to the philosophy of Ayn Rand? Or does this world also have ordinary people looking for a job so they can pay the bills?
And if so, and the boss decides to make a greater profit by cutting half his work force and giving the remaining personnel two jobs at the pay of one (a common practise), how are all the people being so casually offloaded able to find new jobs so readily? Please explain the mechanism that ensures this.
The object of capitalism, in any world of which I am aware, is to minimize labor costs. They do so principally by minimizing the number of jobs. This would seem to be at cross purposes with your “free market” conception of a world awash in paying jobs.
You have fallen into the trap of using empirical data from a non-free market to make judgements as to what would happen in a free market.
It seems pretty clear to me that what you are describing only occurs due to government intervention. Employers choose to cut jobs rather than cut wages because of the existence of minimum wage laws and all the other ridiculous regulations on businesses.
Really? I saw a news report where U.S. employees were willing to take a pay cut than be unemployed. Besides what examples did michael provide that were contrary to free market actions? He’s right, in the sense that businesses want to minimise all expenses, including labour costs. If cheaper labour can be found or the staff can be cut by one-third without cutting productivity then the employer should do it.
“Really? I saw a news report where U.S. employees were willing to take a pay cut than be unemployed.”
And how are they going to take it if it’s illegal?
How is it illegal unless it below the minimum wage? Obviously the new pay wasn’t.
Government regulations make employing many employees a nightmare. The paperwork alone eats up so much time and if you get something wrong you get into big trouble. The regulations are so complex in some industries that you need to hire a specialist of some sort (accountant, lawyer, etc) to deal with them.
In a free market, the involuntary administrative costs of hiring multiple employees is zero.
Jay: Granted. It’s a whole lot easier to just let people go for no reason in a free market. It’s a lot easier to promise them a retirement, or severance pay, or hospitalization, if you know there’s no one to make you pay as you promised, And it’s a lot easier just to show up on payday and tell your work force “I’m broke. Go sue me.”
I know. I had a career employing people. Going through all the hoops is a whole lot of trouble. But the group we belong to considers it to be worthwhile. So the choice is simple: either go along with the consensus or leave the group.
Jay, employers don’t cut jobs in any significant number because of trivial rises in the minimum wage, or OSHA regs or any of the other myriad rules and guidelines. I’ve been an employer. There are immensely greater demand-driven cuts, dictated by the business cycle. The conditions that dictate the employment rate are these: consumer demand and availability of operating capital.
So if it seems clear to you that government regulation is the fulcrum upon which the entire teetering rate of unemployment rests, I’ll suggest that you haven’t had much experience being an actual employer.
However we can easily test your assertion. When regulation goes up, does unemployment increase? Show me some evidence. And when we deregulate, does employment increase? Again, let’s see the facts.
Here’s a quick chart to get you started. Set the parameters to 1981-2010 to get a good view:
http://data.bls.gov/PDQ/servlet/SurveyOutputServlet
Link the changes in unemployment to some specific changes in the regulatory environment. Then I’ll seriously be listening to you.
Now praxeologically prove that minimising costs will in fact minimise jobs. Get to it. And do not try cop out with “lol that’s what I observe” because quite frankly you rely on anecdotal statements an awful lot without any reason for me to accept them, especially not the “I’m experienced you’re not har har” crap that you seem to love spouting.
What I’ve been relying on is observations from life. And what you and your cohorts have been relying on is ‘proofs’ from pure theory, floating in midair. If you choose theory over life evidence, I can’t be of help to you.
I do note in passing that you offer up yet another example of a word the Austrians have taken over and assigned an entirely new meaning to: praxeology. You guys use this one a lot like the way the old Marxists used to use the word dialectics.
Now let’s get to the crux of your comment. I assume this is the comment I made that elicited your response:
“The object of capitalism, in any world of which I am aware, is to minimize labor costs. They do so principally by minimizing the number of jobs. This would seem to be at cross purposes with your “free market” conception of a world awash in paying jobs.”
And your reply was:
“Now praxeologically prove that minimising costs will in fact minimise jobs.”
I never asserted that it did. Read my statement over again, more carefully this time. What you meant to say, I believe, was that minimizing the number of JOBS will minimize labor COSTS. Because obviously, it will. And labor costs form the major expense category in a majority of businesses.
But to increase profits they [the capitalists] have to necessarily exploit more surplus value and therefore have to employ more labor
Life ain’t simple, Dan. You can employ a hundred bean pickers and pick twice as many beans as you did with fifty bean pickers.
HOWEVER: if you’re still not happy with the marginal profits you have extracted from their labors, wait until there’s a labor surplus. Then fire half of them. Tell the remainder they get to keep their jobs if they pick twice the number of beans. Your stolen profits (or ‘surplus value’, ripe for the plucking) will increase in the precise degree to which their rewards have been lessened.
It’s the capitalist way. And your fingernails still stay clean.
“A job seeker who does not want to wait will always get a job in the unhampered market economy in which there is always unused capacity of natural resources and very often also unused capacity of produced factors of production.”
I am reading Human Action, and I generally agree with main Mises’ points.
One of the crucial assumption for the concept of unemployment by Mises is that someone can always get a job IF ” there is … unused capacity of natural resources and … unused capacity of produced factors of production”.
Even if this was naturally true in the first part of the 20th century, I guess these conditions tend to change now. We can leave apart the unused capacity of produced factors of production. However, it is apparent that the unused capacity of natural resources is fastly running down. I think this is a strong counter point againist Mises’ concept of unemployment.
Ideas out there about this counter point?
Perhaps for some natural resources like oil and gold, but what for sun and wind energies for example ?
Also working hours can be reduced.
Beside the production of goods, there is also the production of services.
And why leave apart the unused capacity of produced factors of production ?
We can also add that it is not everybody who needs a job to make a living !
Oil is a very cheap resource. To extract and store energy from sun and wind is much more expensive. For example, batteries for an electric car now cost £7-10,000 (http://video.thesmart.co.uk/media/smart%20Plugged-In%20Report%20-%20FINAL.pdf, page 14). This cost is supposed to go down with more investments, however, it is disputable whether it is possible to use the same amount of energy as the one is used now just from sun and wind.
Yes, the production of services is the one it can be increased with a small use of natural resources, this is what I think too.
I left apart the unused capacity of produced factor of production because I do not have ideas about it, and, also, I think the 2 factors (the unused capacity of natural resources and the unused capacity of produced factors of production) could be thought as independent.
I reckon the majority of humans need a job. Who do not work simply use the work of others.
Tommaso: Why is there unused capacity? Wouldn’t that stem from lack of demand? The theory you support posits that an employer will always hire new people to produce as much as they can, regardless of demand. And we’re constantly seeing that this is not so.
Two years ago, didn’t Detroit close up half of its assembly lines because people weren’t buying their cars? That decision threw tens of thousands of people out of work, from slow demand. Your theory would predict that now that Detroit had so much ‘spare capacity’, people could flock there and all find work.
I think this theory needs more support.
I was talking of unused capacity of natural resources.
I guess that, according to Mises’ perspective, Detroit’s factories would not had closed if they were able to produce cheaper cars.
How is it apparent that the unused capacity of natural resources is fastly running down? Where are the massive price hikes that would signal this shortage? Much as fiber optic replaced copper, one would think that any shortages, and thus rising prices would be met with new products to replace once signaled as needed by the market.
Messieurs Flachey and Rice respond with more scholarly approaches.
Mine is more of another frurstrated shrug.
“…unused capacity…running down….”
Based on what?
If every living person on planet earth were given an acre to live on, we could all fit in North America, alone. (‘course I hosie the Big Sur coastline).
“Limited resources… “ God, where this conception comes from, I’ve no idea. And this absurdity has existed in every generation since the beginning of time….
Reminds me of the likes of Paul Ehrlich. Predicting worldwide famines…
Instead of letting him go chase his butterflies, the followers followed, as they are wont to do. And always will.
Leftists tend to say he was misunderstood, that the models hold up based on the data constraints…
Yuh, models always do when you want to shove human beings onto a Petri dish, block them from escape, and swap the universe’s virtually infinite tapestry for a myopic view of the environment.
“Limited resources.”
Untapped mountain ranges?
The oceans?
The subterranean floors?
The planets beyond?
The galaxy….?
«michael July 10, 2010 at 8:25 pm
“In a truly free market, involuntary unemployment is virtually non-existent.”
Jay– This is an imaginary world, right? So why are we talking about it instead of the real world?»
Free market is only an imaginary construction, a tool to try to better understand what is going on in the real world.
Here is what Mises had to say about it:
“Only at a later stage, [economics] having exhausted everything which can be learned from the study of this imaginary construction, does it turn to the study of the various problems raised by interference with the market on the part of governments and other agencies employing coercion and compulsion.”
http://mises.org/daily/2979#part3
A voice of sanity, finally. The world we presently live in is so thoroughly filled with violent coercion that it is difficult if not impossible to imagine what “a truly free market” would be like.
One thing that has annoyed me about this site are the fanciful imaginations divorced from our present reality. Yes, it would be wonderful if things were free! As author Lloyd Billingsly put it, one might as well undertake a celebrity telethon to abolish death.
What I do find useful is finding ways I can live my life with more integrity, because I do have a chance to change at least that much of the world.
Thank you, Guard. I think I get it now. The answer to anyone pointing out that Mises’ theories bear no resemblance to any observable phenomena is that the reality is wrong– not the theories. It’s only the fact that the world provides no example of a market that’s sufficiently ‘free’ that prevents everything Mises ever said from coming true.
It’s very elegant. At least now when we die and ascend to Heaven, we’ll have a place where all his theories can become realized. For every soul there will be a diaphanous white gown. And a little white cloud to stand on. And little bits of wealth we have just ‘created’ out of gossamer.
In the meantime I like ideas that can be demonstrated to work RIGHT HERE. I’m results oriented, hired to get things done right the first time.
Like how your received theories about public education have worked out so well. Ah well, public school in Heaven…blah, blah, blah.
«Gil July 10, 2010 at 1:52 am
“Unemployment in the unhampered market is always voluntary.”
People can’t get fired, get sick or injured? Businesses can’t streamline or go belly-up?»
Mises is talking about a job-seeker who is already unemployed:”If a job seeker cannot … He remains unemployed.” (beginning of the article)
If he is already unemployed, it could be because he gets fired, sick or injured, or else. The problem, in summary, is about to know if he will *remain* unemployed or not, how long, and why.
These things can happen, but in an unhampered free market there is always a reserve of available capital to employ people who get fired, downsized or suffer from business failure of any kind.
Sickness and injury is not unemployment, it is disability, and you can insure against this.
Government reduces investment in capital as well as creating severe malinvestments with banking bubbles, and so there are no open job offers for those who lose their employment unless they go through a long waiting period, and are lucky.
What a wealth of dialog for a play!
Those who claim that there could be a time when all available resources are used up to to their maximum potential, are assuming that there is a limited amout of knowledge available to humans and that there could be a point when humans discover everything there is to discover about the world. These assumptions are not only unrealistic but also ontologically flawed.
“Unemployment is a phenomenon of a changing economy.” All economies change as is their nature, so there will always be unemployment. Few people “choose” unemployment unless they willing violate company policy, are retired or have saved to seek another job or profession at a time of their choosing, in which case they are in transition. Don’t forget that for every percentage point of the unemployed there is a corresponding higher percentage point of the employed.
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