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Source link: http://archive.mises.org/16737/six-fundamental-errors-of-the-current-orthodoxy/

Six Fundamental Errors of the Current Orthodoxy

May 2, 2011 by

What they don’t understand: aggregation, relative prices, interest rates, capital structure, money pumping, and regime uncertainty. FULL ARTICLE by Robert Higgs

{ 137 comments }

Patrick Barron May 2, 2011 at 9:57 am

Fantastic lecture! A mini-course in Austrian economics and devastating indictment of current policy.

Eric May 2, 2011 at 7:41 pm

I agree, I’m sending this to some of my buddies.

Russell Munves May 2, 2011 at 9:59 am

Very good analysis! So why are so many smart people blind to these points? Probably because the current paradigm benefits the current powers that be and the electorate does not undertand the problems. See Thomas Kuhns THE STRUCTURE OF SCIENTIFIC REVOLUTIONS. But when the deleterious effects on the economy become bad enought to seriously affect the voters for a long period of time, they become intuitively aware that all is not right in the state of Denmark even if they are not quite sure what the problem is. Hence the growth of the Tea Party movement.

Smack MacDougal May 2, 2011 at 3:56 pm

Robert Higgs tells a good story.

However, Higgs gets it oh-so-wrong because of his false beliefs about scarcity and about capital, especially regarding interest and the foolish false belief of time preferences.

On Scarcity
————-
However, Higgs gets it oh-so-wrong when he writes “Without choice, constrained by scarcity, no true economic action takes place.” It’s buying power that constrains choice. Scarcity has nothing to do with it.

Scarcity is chimera. Scarcity is a socialist concept to justify political action — confiscation of output and redistribution to those of favored groups. Those who parrot the false belief that economics has anything to do with scarcity have accepted the rhetoric of socialists, have become indoctrinated into socialist thinking and have let false beliefs get inculcated into their minds.

The one, true, great, invariant law of economics — the Law of Prices — holds that the winning bids of demand in the face of supply set the price.

The highest bidders win the day for whatever is being offered. It’s through superior buying power that highest bidders win the day. In short, it is a lack of cash and credit that makes losers go without. Excuse makers express their false beliefs and blame the false concept of scarcity rather than their skill at winning economic quantities of purchasing (cash and credit) to gain what they want.

On Capital
————
To help many come to see at long last truth, two kinds of capitalists exist, money capitalists and material capitalists, although the distinction is for illustrative purposes.

Material capitalists use material capital (products that yield intermediate goods) to produce what are products that either are material capital to another or products of final goods.

Money capital arises because earning rent on money capital, that is earning interest, obviates the need for money capitalists (bankers, lenders) to guess what material capital producers need and thus efficiently reduces the need for them to be Nostradamus.

In short, money capitalists have swapped producing material capital (differentiated capital) for producing money capital (undifferentiated capital). No longer do money capitalists need to guess what material capital material capitalists demand. Nor do money capitalists need to take raw material, convert such into production goods and then produce final capital (products) themselves; and thus, money capitalists need not guess what goods yielding material products get demanded as the expressed preferences of consumers.

On Interest
————-
Austrians, like all others of the the neoclassical school of economics, suffer from false beliefs as expressed in their prejudice to see interest as some unique entity in economics. Yet, interest is not.

For as de Fontenay adroitly stated, “The theory of revenue must be the same for all classes of human production.”

Interest has nothing to do with “time preference.” The whole “time preference” theory of Mises amounts to foolery. The belief that others must be paid a high rate of interest for use of their funds to induce them to “give up present consumption” is false.

Interest is like any income — rent, futures, annuities, wages, copyrights. Interest arises from the recurring purchase and sale of capital in exchange for rights of action. Interest has nothing to do with being compensated for putting off future consumption.

Money as mere medium of exchange is the convenient expression of the value of the material capital (production merchandise) bought. Interest gets paid upon production merchandise bought in the end.

Those who become money capitalists do so because it is their preference to not become material capitalists. Time has nothing to do with it.

Claiming “…economic sense if the interest rate had fallen in a free market, thereby signaling that people wish to defer more consumption by saving more of their current income.” amounts to foolery.

As long as ever more profit can get earned on arrangement of material capital but a lack of material capitalists exist to gain that profit, to induce borrowers to rent (borrow) the medium of exchange and to become material capitalists who convert such borrowed money capital into their own material capital preferences, money capitalists as lenders must reduce their asking rent rate (aka interest rate, aka price of money).

In free markets, the interest rate falls because money capitalists must induce others to switch from what they are doing now and become material capitalists. In short, money capitalists are betting that the addition of material capitalists can discover the right combo of material capital to produce goods-yielding products such that the effect of the Law of Prices allows for sales to exceed costs, that is for profits to arise, and from profit, that interest (rent) can get paid. For without profit, no rent, and hence, no interest can get paid.

On the Cluster of Errors and More Time Preference Foolery
———————————————————————–
Higgs goes further to express false belief when he writes, “But if people have not changed their preferences in this way and continue to prefer present consumption relatively as much as they did previously, then businesses will make mistakes by choosing these kinds of investment projects, which are, in effect, attempts to anticipate future demands that will never eventuate.”

Murray Rothbard himself said, “… why is there a sudden general cluster of business errors? This is the first question for any cycle theory. Business activity moves along nicely with most business firms making handsome profits. Suddenly, without warning, conditions change and the bulk of business firms are experiencing losses; they are suddenly revealed to have made grievous errors in forecasting.”

Rothbard then goes on to blame bankers who “print new money” and in doing so, these nefarious bankers trick otherwise astute businessmen into believing that the “supply of saved funds for investment has increased” and thus such fooled otherwise astute businessmen have accepted a wrong belief about time preferences.

Yet, such a convoluted conspiracy theory story of treachery and trickery need not get told. As Keynesians and Monetarists foolishly believe that somehow money is different, so too, do Austrians foolishly believe that somehow interest is different.

Interest is not some magical thing outside of economics. Interest paid is a kind of income, the same as rent for land or wages for labor.

As long as profits can get earned by all material capitalists in the game and money capital remains idle, money capitalists must induce ever less clever persons who lack business acumen to become businessmen. Inducement comes from lowering interest rates so that these less clever persons believe they can gain profit from their jubilant expectation of sales that never materialize precisely because they lack skills needed to make stuff that turn shoppers into customers.

In the end, without profit, no interest can get paid to bankers and other assorted money capitalists.

For it should be clear to all at once, that if no surplus crop exists from land, no rent can get paid on that land. Even if surplus crop harvest were to exist, if no demand exists to acquire that surplus, no rent can get paid.

It is only when demand exists to take up the surplus of crops that rent can arise. Rent is the share of profits the farmer distributes to the landlord.

As ever greater demand exists for a surplus of crops, the price of such surplus rises. Thus, it pays to enlarge the area of cultivation.

Rent near the demand for the surplus rises as the cost to bring such surplus is lower than cost to bring additional surplus from further out. The further out one goes, the higher the increase in the cost of production and the profit, from which rent gets paid decreases until at last no profit exists from which to pay rent.

And so is it the same with interest. The smartest businessmen with most business acumen are first to enter into production. As demand rises for their products, it pays to enlarge the area of production. The further out one goes by inducing ever dumber persons into trying their hands at business, the profit from which interest can get paid decreases until no profit exists from which to pay any interest.

Eric May 2, 2011 at 7:33 pm

Scarcity is a chimera. It has no effect on economic choice.

—-

Let’s see, I want to travel to some far off place. The fact that there are just so many airplanes and airports has nothing to do with the choices I’ll make. After all, if I have enough buying power, say, a quadrillion dollars, I can simply buy not only the plane tickets, but pay for the airports and airplanes to, say the arctic circle. But suppose I don’t have enough buying power? Suppose I want a trip to Mars – is there nothing scarce here? Simple matter of money (smom)?

Smack would have us believe that supply and demand operate completely without concern for supply – another way of saying some things are more scarce than others.

His analysis is like looking at the sounds of one hand clapping.

—–
On Capital.

—–

I’m not sure what he is trying to say on Capital. He merely states that there are middle men that sit between borrowers and lenders. I don’t see how this adds or refutes anything in the article.

—–

Interest has nothing to do with time preference.

If this is so, then perhaps Smack will be willing to lend me his life savings for 1000 years, first payment to be made after year 999. He may choose any interest rate he wishes.

—–
On cluster of errors.
—–
There’s a grain of truth in what Smack says here. Yes, the marginal businessmen who couldn’t qualify for a loan will be lent money, and when that money is not as freely available (when credit is tightened later) this marginal businessmen will not be able to borrow more money to keep his failed business going.

This was seen in the real estate booms. But it wasn’t simply dumb contractors that built too many houses, it was smart ones as well. As long as the FED kept printing ever more money for cheap loans, it made sense to build and sell more houses. What else were builders to do? Should they all have decided to throw away years of experience building houses and go into the mining business?

So, in a severe bust, even the smart businessmen are seen to have erred. That is what Rothbard is talking about – cluster meaning most or all of the businesses are seen to have erred in predicting the demand for their product in the farther future. And indeed, they all seem to have made the error at the same time. The error is only seen when the credit runs out. Before that, it seems that the credit will go on forever – but then that scarcity thing finally hits and there’s more money and credit than scarce REAL stuff to buy. Even the slightest tightening by the FED brings on the bust.

(This time around they appear determined to keep printing more and more forever – time will tell – Mises and Rothbard would predict an hyper-inflationary crackup result).

The Mises and Rothbard theory go futher, they also explain why it is the longer term projects that have the most difficult time. It’s not the retailers who have to lay off large percentages of their staffs, it’s the car companies and the raw material businesses which have to plan over many years that have the biggest problems. (Now one might refute this on data, but Smack doesn’t even discuss this aspect of the ABCT).

Smack MacDougal May 2, 2011 at 8:40 pm

Eric says:

Smack would have us believe that supply and demand operate completely without concern for supply – another way of saying some things are more scarce than others.

Yet Eric must have hallucinated and conjured into his mind a wild tale to which he told himself. For nothing I have written would leave an stable-minded person to come to such conclusion.

Typical of someone who suffers from cognitive dissonance, immediately, Eric mounts an ad homenim attack to defend the silly false beliefs he has accepted and that have been inculcated into his mind, such as the silliness of “time preferences.”

Money lent at interest (money capital) is done so because that is the product the money capitalist sells.

The money capitalist concludes that rather than buy material capital and attempt to make something for which demand might be insufficient to yield profit and thus fail to earn so-called (material) capital interest, often said the natural rate of interest on (material) capital; the money capitalists decides to sell money capital and buy a right of action from another material capitalist.

It’s that simple. No one needs an elaborate theory of time preference like something from Jean-Claude Van Damme in Time Cop.

The money capitalist buys the right to claim a part of the profits, if any exist, from the material capitalist. The material capitalist engages in production of things in hopes of earning sales that exceed the Cost of Production suitably sufficient to distribute a share of profit to the money capitalist, that is, to to pay rent (interest) on money capital.

When Sally Secretary does the above by buying shares of APPL for her 401-k rather than rolling up her sleeves and going into the smart phone manufacturing business herself, we think nothing of it. Yet, when foolish neoclassical economists, in this case, the Austrians think on this matter, they devise an elaborate time preference theory.

Rothbard became hung up on his great “Cluster of Errors” because he looked at it from the wrong perspective — the perspective of entrepreneurs as material capitalists.

The only cluster of errors arises when money capitalists bet on ever dumber (risker) persons who fancy themselves as material capitalist entrepreneurs. One need only reflect on the Dot Com to Dot Bomb era to see this is so.

To bring into production, marginal-producing, scrub soil that sits ever further way from the marketplace of demand, demand must grow high enough subject to the Law of Prices to make such inferior soil earn profit to pay rent.

So too is it with humans. To bring scrub humans into production as material capitalists, money capitalists must induce them by lowering interest on money (the rent rate on money). Otherwise, such scrub humans cannot earn profit and no rent (interest) can get paid.

Matthew Swaringen May 2, 2011 at 9:07 pm

“Yet Eric must have hallucinated and conjured into his mind a wild tale to which he told himself. For nothing I have written would leave an stable-minded person to come to such conclusion.” – This isn’t ad hominem?

“Typical of someone who suffers from cognitive dissonance, immediately” – This isn’t ad hominem?

“defend the silly false beliefs” – This isn’t ad hominem?

The rest of your statements, and I’ll gladly encourage anyone else to read them and come to their own conclusion, is really just a bunch of half-truths and total nonsense. You describe time preference as an “elaborate” theory, when it really isn’t all that complicated. You oversimplify things constantly and use terms in a way that obscures the meaning of what you write so that it is difficult to interpret.

You are fantastic if someone wants to have a long circular argument and get nowhere.

Smack MacDougal May 2, 2011 at 9:18 pm

For your weak mind, Matthew Swaringen, it’s called tit-for-tat.

Merely because you make some idiotic claim as you do here:

I’ll gladly encourage anyone else to read … really just a bunch of half-truths and total nonsense.

does not usher your foolishness into the realm of truth.

The Austrian School of Neoclassical Economics suffers from the same flaws as all of the other schools of Neoclassical Economics.

All have been led astray by unfounded, foolish claims of baseless, pseudoscience psychology — e.g., marginal utility, time preference — as well as being built upon the many fallacies of both classicists Adam Smith and David Ricardo. It matters not whether it was Mills to Jevons or Menger to Böhm-Bawerk.

The dummy Marxists as well as the dummy Georgeians have built their faux, pseudoscience economics from the same base of Smith and Ricardo.

Mises and Rothbard made many errors because of being lifetime academicians neither of whom ever ran any business much less a profitable one.

Smack MacDougal May 2, 2011 at 8:53 pm

Disingenuously, Eric misquotes me and writes:

Scarcity is a chimera. It has no effect on economic choice.

Of course, anyone can see right through such a feeble attempt at argumentation.

I wrote, and to quote myself

It’s buying power that constrains choice. Scarcity has nothing to do with it. Scarcity is chimera. Scarcity is a socialist concept to justify political action…

To believe in scarcity is to disavow the one, true, and only law in the whole of economics — the Law of Prices — and thus to reject economics.

Again, the Law of Prices holds that the winning bids of demand in the face of supply set the price.

If only one thingamabob exists on the whole of the earth and someone is willing to pay a trillion dollars while everyone else is willing to pay something less than a trillion, that only one thingamabob exists doesn’t make it scarce. The rest of those who would like to possess it simply haven’t the means for the winning bid.

Those who claim such is scarce have conflated scarce with what is rare.

Those who cry scarcity whine for their lack of skills to earn money to buy stuff for which they have greedy desire to get, but for which they lack character to earn.

For it is not long that material capitalist can sustain production if her or his costs of production exceed sales earned. For in short order, such a producer gets put to ruin.

Only when the winning bids of demand in the face of the supply set a price suitably sufficient that sales meet the cost of production (in the absence of rent and interest owed) can the material capitalist live to produce another day.

Thus all should come to see at once the great working of the Law of Prices as the one true law that girds under the whole of economics.

Smack MacDougal May 2, 2011 at 9:35 pm

Again, Higgs wrote the often expressed false belief:

Without choice, constrained by scarcity, no true economic action takes place.

Yet, it is buying power that constrains choice. Scarcity has nothing to do with it.

Take two women, one with $200,000 and one with only $15,000 in the market for a new car.

The women with $200,000 has many choices before her, from BMWs and Audis to Nissans and even Chryslers. In fact, she can buy from nearly every car manufactured today that would not be classed as a supercar and she could buy any of few supercars! This cougar has amazing buying power.

The woman with $15,000 has few choices. She can buy only a handful cars like a Honda Fit or maybe a Ford Focus. This poor woman has little buying power.

58,264,344 new cars were manufactured in 2010. That’s many choices, the opposite of scarcity! However, the $15,000 woman faces few choices.

Any right-minded thinker at once sees that it us buying power that constrains choice and not scarcity.

tkwelge May 3, 2011 at 12:22 am

I have a hard time buying this idea that there is no scarcity. I fear that you are playing word games, and you are simply changing the meaning of the word “scarcity” for your purposes. I see what you are saying. If people genuinely provided 200,000 dollars worth of value for which they were paid as much, they would be able to acquire a car. If somebody can’t afford something it is not because of scarcity, but because they didn’t produce a car’s worth of output in order to acquire the car. However, cars are still scarce in the sense that not everyone can have a 200,000 dollar racer. I don’t think it would even be possible, no matter how hard people labored, to provide every adult human with such a vehicle, especially not in the next 5 seconds. I guess that you could argue that humanity simply has to work hard enough to invent cold fusion in the near future or something, but that seems like blind faith that humanity can actually achieve such things. Man is not a god-like creature that can control every aspect of his reality. In fact, man is defined by his powerlessness compared to god. Scarcity exists. The fact that I could theoretically produce enough value to consume anything that I want is not good enough.

Maybe I’m missing your point. You tend to speak in an erudite manner that makes comprehension difficult. I’ve also been smoking weed all night.

Smack MacDougal May 3, 2011 at 1:04 am

Well, tkwelgem here’s a hats off to you for relaxing and enjoying a great goods inducing product such as marijuana.

Perhaps because you are stoned, you expressed this rather redundant phrase:

… 200,000 dollars worth of value

What is this business of “worth of value”?

Value results from the expression of a ratio of importance between two commodities. When one of two things in exchange is money, we give value another name — price.

Higgs expressed his false belief:

“Without choice, constrained by scarcity…”

Higgs has said that scarcity constrains choice. Only socialists believe such. It is the basis of their taking and redistribution schemes. Scarcity has nothing to do with choice.

Choice means to chew, taste. Contrast choice with decision, which means to cut off. Choice implies being able to buy one thing and then buy another.

Only buying power — cash and credit — impede choice. Clearly, someone with more buying power has more choice to someone who has less buying power, relatively speaking. Buying power alone constrains choice. Never does scarcity constrain choice.

Higgs could have been right had he said that rareness constrains output. There was only one Mozart who could pen all Mozart’s compositions.

Nonetheless, the scarcity bit is the least to worry about. Austrian School of Neoclassical Economics is flawed as all schools of Neoclassical Economics are. All schools of Neoclassical Economics base their doctrines on two things: [1] pseudoscience psychology [2] Smithian, Ricardian and Millian fallacies, of which there are numerous.

The Austrian School of Neoclassical Economics rests on two major false beliefs: marginal utility and time preference. Both beliefs arise from faulty pseudoscience psychology never proven scientifically and thus must be rejected by all.

Only one law exists for the whole subject of economics, the Law of Prices. Any explanation that renders exception to this law automatically fail.

João May 3, 2011 at 7:26 am

What. The. Hell.
Let me give you one advice: there is *ONE* thing that is scarce: TIME. Even if you have all the resources in the world, you don’t have all the *TIME* in the world. If time is scarce, your usage of available resources is also scarce. You need to know how to use resources. Knowledge is also scarce, as you are certainly not God.

Inquisitor May 3, 2011 at 1:38 pm

Anyone who thinks they can define scarcity out of existence is pretty much dishonest or a kook, or somehow thinks word-games suffice as scientific theory.”Only buying power — cash and credit — impede choice. Clearly, someone with more buying power has more choice to someone who has less buying power, relatively speaking. Buying power alone constrains choice. Never does scarcity constrain choice.”

Yeah, because they have more resources at their disposal with which to entice other resource-holders into exchange. If these resources were infinite in supply, they would have no need to do such, because there would be no rivalry in consuming them. Buying power is born of scarcity. Cash/money is a medium of exchange that stands for resources, so what you’ve just said is “only disposable resources constrain choice”.

Wow. So you mean things are, scarce? Troll or dodo. Or both. FYI, it’s typically socialists who deny scarcity or argue it’s artificial.

J. Murray May 3, 2011 at 1:45 pm

Dodos aren’t scarce, it’s just an uneven buying power from the people who want to buy dodos vs the people who want them extinct. If we tax all the people who want them extinct and give it to the people who want dodos, they’ll magically pop back into existence because now they have the buying power.

tkwelge May 3, 2011 at 9:50 pm

“Austrian School of Neoclassical Economics is flawed as all schools of Neoclassical Economics are. All schools of Neoclassical Economics base their doctrines on two things: [1] pseudoscience psychology [2] Smithian, Ricardian and Millian fallacies, of which there are numerous.

The Austrian School of Neoclassical Economics rests on two major false beliefs: marginal utility and time preference. Both beliefs arise from faulty pseudoscience psychology never proven scientifically and thus must be rejected by all.”
——————————————————————————————————-

You’re repeating yourself often and you are explaining yourself sparingly.

I understand that “200,000 dollars worth of value” is not an objective measure. I was hoping that you weren’t going to focus on that statement, because I had other questions that I wanted answered.

Smack MacDougal May 3, 2011 at 10:30 pm

Few seek truth, tkwelge.

Participating commentators on the Mises.org site seek only to worship false apostles and false idols such as Mises, Rothbard.

When significant errors of Austrian / Misean / Rothbardian economics get pointed out to the parishioners of the Church of Mises.org, e.g., time preference foolery, dual claims of ownership (bankers are thieves); as if they’re straight from the Da Vinci code, they act as Opus Dei assassins protecting dirty secrets of the Roman Catholic Church.

In addition to time preference foolery, already shown elsewhere here by me to be thoroughly false, the entire Misean-Rothbardian beliefs about banking are false.

The expressed belief by Rothbard that a double claim of ownership exists on money deposited with a banker is more foolery. Unfortunately, Walter Block has been suckered by it.

For anyone who knows about Commercial Law knows that a banker is a trader who buys money and debt by selling bank credits. A depositor sells his money to a banker, which is a muutum that in law and commerce gets called a deposit and buys bank credits, which are rights of action against a banker, that is the right to claim future money.

Bank credits give you a RIGHT OF ACTION to money in a future of the same amount. This is a right merely.

Being for liberty is great. Government intervention wrecks everything. Yet, no good cause exists to be slavish to false beliefs as espoused by Mises and others.

Matthew Swaringen May 2, 2011 at 9:16 pm

“Scarce” in this context simply means that once it is consumed it is gone, or that when it is in the possession of another no one else can have it at the same time.

Your example would “conflate” scarce and rare, but they certainly are similar terms, which is why they are synonyms in just about any thesaurus for the English language.

Smack MacDougal May 2, 2011 at 9:21 pm

“But, but, but, it’s in the dictionary!” is the claim of the silly, the weak-minded, the false-belief filled addled-mind.

Those that suffer from the scarcity fetish worship at the high priest fool, Paul Ehrlich. Ask Paul how his wager worked out with Julian Simon.

Those that speak with the tongue of socialists and say “scarcity” and believe it to be real do not get at all economics.

Daniel May 2, 2011 at 9:57 pm

Smack, stfu, seriously

and

http://mises.org/resources/4950

I’d have linked you to Lessons for the Young Economist instead, but I’ll leave the ad homs to you :)

Smack MacDougal May 2, 2011 at 10:30 pm

Poor Daniel. How’s that Misesian kool-aid. Von Mises was a tenth rate economist who lifted his ideas from the works of others that predated him by as much as 50 years.

Next year, when I read a stack of books on socialist critique available on GOOGLE books, I can tell you if his socialist critique was original or not.

In the meantime Danny, you might want to read my many comments elsewhere on the Mises blog and on other sites so you can learn genuine economics and not the silly stuff pushed by the Austrian School of the rather absurd Neoclassical Economics.

Until then, Danny, good luck with the slew of false beliefs that you’ve swallowed whole and uncritically while worshiping at the Church of Mises, bending before your idol.

HA HA HA

tkwelge May 3, 2011 at 12:25 am

“Until then, Danny, good luck with the slew of false beliefs that you’ve swallowed whole and uncritically while worshiping at the Church of Mises, bending before your idol.”

Wow, reading your comments is sooooo enlightening. You talk like your speak wisdom, but all I see is a man who slings childish insults. Yawn.

Smack MacDougal May 3, 2011 at 12:36 am

As opposed to what?

stfu

as written by Daniel, which means shut the FU*K UP.

Get real, tkwelge.

tkwelge May 3, 2011 at 9:51 pm

But Daniel isn’t asking me to bow down to his great wisdom, and you are. You’re calling people out. If you call people out, expect to have to defend yourself.

Smack MacDougal May 3, 2011 at 10:52 pm

You hallucinate tkwelge. I’ve asked nothing of you. Yet, you cannot say the same. As you have asked from me.

I’ve called out no one.

Merely, I exposed the idiocy of time preference and the idiocy of scarcity. Because others suffered a bout of cognitive dissonance, they chose the low road of ad hominem.

tkwelge May 4, 2011 at 10:03 pm

You insult people constantly…

João May 3, 2011 at 7:17 am

“Von Mises was a tenth rate economist who lifted his ideas from the works of others that predated him by as much as 50 years.”

Nonsense. Pretty much every single damn person in the world lifts ideas from works of others. You’re either a troll or just a stupid guy posing as some kind of intellectual. Get a life.

Smack MacDougal May 3, 2011 at 10:07 am

You amuse João.

von Mises even stole the phrase “human action.” The guy was unoriginal right down to the title of his magnum opus.

However, that mere words have triggered you into anger reveals much about you. How you amuse.

Smack MacDougal May 2, 2011 at 10:43 pm

“Time preference” HA HA HA. Pull another leg. http://www.yankees2000.com/y2k/uploaded_images/timecop-787091.jpg

Without proper entrepreneurial experience, Mises and Rothbard lacked referential experience to understand how capital works. Worse, Mises swallowed hard on a giant waste of time, the work of Eugen von Böhm-Bawerk.

“The time will come when people will realize that Böhm-Bawerk’s theory is one of the greatest errors ever committed.”

~ Carl Menger, founder of the Austrian School of Neoclassical Economics

Ockham’s razor cuts to shreds Böhm-Bawerk-Misesian-Rothbardian Time Preference mumbo jumbo.

Interest arises solely because the money capitalist buys the right to claim a part of the profits, if any exist, from the material capitalist in preference to becoming a material capitalist and attempting to produce something in hopes of profit.

tkwelge May 3, 2011 at 12:33 am

You argue that the investor or “money capitalist” is simply buying the right to make money and not work. However, the “money capitalist,” or somebody that he was able to acquire the money from, at some point had to roll up their sleeves and do some actual “work” (work in this sense includes any activity that provides value to anybody else willing to pay for it to occur) to acquire that wealth. By saving their money that they earn at the end of the week, instead of immediately spending it, they are revealing a “preference” for future consumption over immediate consumption. They are not merely buying the rights to future profits. They are giving up the value created by their earlier efforts in the meantime, and they are transforming their patience into value that is added onto the value of the original efforts that created the money that they had prior to the investment taking place. The added value comes from the patience of the investor. Thus the relevance of time preference.

Smack MacDougal May 3, 2011 at 12:40 am

You have hallucinated, tkwelge.

No where could anyone on earth find any words I have written that would suggest even remotely that I claim money capitalist has bought the right to “not work”.

Do you have deficiency in reading comprehension skills, tkwelge, because your action seems to suggest such.

Clearly, anyone not suffering from a mediocre IQ (120 or less) would see at once without needing for it to be written out, that in deciding to buy a right of action against a material capitalist, a money capitalist would do investment homework.

Daniel May 3, 2011 at 3:18 am

You’re a broken record nerd that offers little explanation and a lotta ad homs

In the end, what you write that is true is not original and what you write that is original is not true.

Smack MacDougal May 3, 2011 at 3:25 am

The clever Daniel says,

You’re a broken record nerd that offers little explanation and a lotta ad homs

Let out all of your anger Daniel! Defend the assault on the walls erected in your mind, the walls that imprison you with your false beliefs. Let your cognitive dissonance fill you with rage. Look at you go!

Economics, all matters of man regarding wealth, girded by the great sciences of wealth and profit are nerdy to you? Earning bank and living large is nerdy to you?

Many in the ghetto have adopted a knowledge is uncool for their buffalo stance. It’s a most bizarro community psychology to ape, Daniel.

Oh how you amuse Daniel.

integral May 3, 2011 at 5:46 am

I’m still not able to guess how serious you are, dude.

Daniel May 3, 2011 at 9:26 am

See? It’s always the same tune

Read your posts and try seem them as other humans would

Do they come across as someone who is serious and ready to engage in deep debate or do they come off as arrogant and intentionally unclear while making personal attacks at others?

If you’re trolling, then congratulations, you might be succeeding at that, however, if you are actually offering an alternative to established austrian science, then you’re just coming off as an arrogant dick that can’t be taken very serious.

Russell Munves May 3, 2011 at 9:51 am

If Smack were serious or interested in serious civil discourse, as opposed to baiting those who are using ad hominem attacks, he would not hide behind a pseudonym. He would identify himself so that all can judge him based on his discourse.

Smack MacDougal May 3, 2011 at 10:48 am

The problem with jokers like you Russell and the rest of the participants here as well as elsewhere on the mises.org boards is thus:

When faced with superior explanation of reality, you suffer cognitive dissonance. For in the darker recesses of your minds you have caught a glimpse of truth after reading my words; but because your huge emotional investment into von Mises, you believe that you cannot afford to break free, psychologically. So rather than come to truth, you defend your false beliefs.

Mises entire theory stands or falls on this “time preference” foolery.

Yet, it has been shown by me, easily, that interest, a kind of income, does not hinge on time preference anymore than choosing to work as a unionized government flunky rather than owning a restaurant hinges on time preference.

If one needs to make special cases for things — as Mises has in the case of interest — then one has not seen truth. All observed cases must conform to the same law or what one claims as a law is not a law.

From the moment I offered truth, others have engaged in ad hominem against me rather than try to refute what cannot get refuted.

The Law of Prices — the winning bids of demand in the face of supply set the price — is the law that girds under the whole of economics. Understanding this one law is key to getting all of economics. All man-made law (political economy) seeks to distort supply or demand because of the Law of Prices.

Mises was right to stand against socialism. Yet, was Mises original in thought? Mises was not when it came to economics. Worse, Mises failed to credit all others, who in essence, came up with Mises’ theories long before Mises himself.

Rothbard was smart. He was brilliant as a historian. All should read ‘Conceived in Liberty’. Yet, Rothbard missed key aspects of money and credit because being a lifetime academician, Rothbard lacked practical economics experience about money and credit.

“You take the blue pill. The story ends. You wake up in your bed and believe …whatever you want to believe. You take the red pill. You stay in Wonderland and I show you how deep the rabbit hole goes. Remember, all I’m offering is the truth. Nothing more.”

https://www.youtube.com/watch?v=arcJksDgCOU

Russell Munves May 3, 2011 at 11:30 am

My point exactly!

Inquisitor May 3, 2011 at 1:34 pm

I’m not even sure Smack is worth a single line of response, since he cannot even get the theories he opposes right, offers no real refutation of them other than “HAHAHA” and boring ad hominem to go with it.

“von Mises even stole the phrase “human action.” The guy was unoriginal right down to the title of his magnum opus.”

Whom did he steal it from? Whom did you steal the phrase “You amuse” from, eh?

Obvious troll.

Smack MacDougal May 3, 2011 at 1:47 pm

So rather than discuss the failings of the foolery of “time preference”, you resort to ad hominem, Inquisitor.

Foolishly, Inquisitor, you say:

I’m not even sure Smack is worth a single line of response…

And then you go onward for several lines blathering away. Worse, you make a second post elsewhere, addressing me!

You’re dimwitted.

Daniel May 3, 2011 at 2:08 pm

No, Smack, you’re the scientology of economics: you claim everyone else is a cult but you offer no explanation unless we give you money or attention or something

Inquisitor May 3, 2011 at 2:11 pm

What -are- the shortcomings of it? You’ve offered a competing “theory” but that just means you have your own personal view on it. It does not dismantle the fact of time preference, nor did you really respond to this from Eric:

“Interest has nothing to do with time preference.

If this is so, then perhaps Smack will be willing to lend me his life savings for 1000 years, first payment to be made after year 999. He may choose any interest rate he wishes.”

I suppose the meaning of the phrase “I’m not even sure” is lost upon you as is that of scarcity? Before hurling ad hominem attacks, make sure your reading comprehension is up to scratch, sweetheart.

Smack MacDougal May 3, 2011 at 3:21 pm

Well, sweetie Inquisitor, what is to answer, toots?

Eric expressed:

If [Interest has nothing to do with time preference] then perhaps Smack will be willing to lend me his life savings for 1000 years…

Such expression is retarded on its face.

Where’s the return? The Money Capitalist seeks a share of profit. No time preference exists.

Perhaps you should scour Craigslist, sugar Inquisitor, and hire someone to teach you reading comprehension.

Mises and Rothbard were fools to believe that investors are reluctant bitches who would rather spend now rather than later all owing to a fantasy of a non-existent time preference. Mises and Rothbard believed such foolery precisely because they were talking shop academicians rather than investors and speculators — truly productive people of society.

Money Capitalists — investors and speculators — seek return. Their product is undifferentiated capital, which they sell to Material Capitalists, who convert such into differentiated capital.

It has been spelled out clearly above.

Time Preference amounts to unnecessary foolery. Those who cling to such mischievous myths do not get economics at all. Anytime that anyone must resort to extra-explanatory exception to a system fails to explain phenomena of that system.

Mises and Rothbard did not get income and hence profit, one of the two keystones of economics. Thus Mises and Rothbard were outright failures in economics.

All of Neo-classical Economics amounts to foolery precisely because it’s based on pseudscience psychology. The Austrian School is but one of the schools of Neo-classical Economics.

Enjoy your false belief existence, honey sweets Inquisitor. HA HA HA

Inquisitor May 3, 2011 at 6:12 pm

“Such expression is retarded on its face.”

How so? If you do not prefer the same good now to the same good later, then receiving payment on your loan in 999 years time should be just as good then as it is now. Deny that and you accept the fact of TP.

“Where’s the return? The Money Capitalist seeks a share of profit. No time preference exists.”

Ipse dixit/denying the antecedent.

“Mises and Rothbard were fools to believe that investors are reluctant bitches who would rather spend now rather than later all owing to a fantasy of a non-existent time preference.”

Prove it and forestall all consumption to the indefinite future.

“Their product is undifferentiated capital, which they sell to Material Capitalists, who convert such into differentiated capital.”

Lets break this down. Capital refers to real goods with which goods down the road are produced. Money doesn’t produce them, it procures them. The financial (“undifferentiated”) capital of which you speak is born of resources which individuals economise, usually in the form of money (which they procure by trading real resources with other; the benefit of this “undifferentiated” capital of which you speak ONLY accrues because it is in the form of money, i.e. the most widely accepted, near-universal medium of exchange.) TP is used to describe the general phenomenon of interest, not just money lent out to capitalists/consumers but also accruing to savings. Your own hypothesis fails to explain interest on savings not lent out and only is an attempt to explain interest charged on loans. Hint: asserting time preference is false doesn’t mean it actually is.

“It has been spelled out clearly above.”

It hasn’t, really.

“Time Preference amounts to unnecessary foolery. Those who cling to such mischievous myths do not get economics at all. Anytime that anyone must resort to extra-explanatory exception to a system fails to explain phenomena of that system.”

How is it an “extra-explanatory exception”? It describes a fact of existence, i.e. that individuals place a premium on a good now versus that good in the future. Your own hypothesis introduces two rules: one for savings, another for sums lent out, whereas the TP explanation neatly encompasses both. Now you might disagree that TP suffices to explain the phenomenon of interest but you’ve not given any reasons to, unlike Dr Reisman who at least attempts to make an argument to that effect… so who do you think you’re fooling?

“Mises and Rothbard did not get income and hence profit, one of the two keystones of economics. Thus Mises and Rothbard were outright failures in economics.”

Blatant non sequitur/ad hominem.

I think you’re actually deranged enough to believe this, like that kook wingnut.

nate-m May 3, 2011 at 6:39 pm

@ all

Never argue with a moron. They will drag you down to their level and beat you with experience.

Smack MacDougal May 3, 2011 at 6:52 pm

Inquistor’s subconscious exposes himself when he expresses:

I think you’re actually deranged enough to believe this, like that kook wingnut.

Inquisitor is right in that not only am I not deranged enough to believe his crazed, uneconomic explanation, I am not deranged at all to believe any of his nuttiness.

Human action proves daily exactly what I’ve outlined elsewhere in the comments in response Robert Higgs mistakes as well as the Misean-Rothbardian foolery of time preference, which makes Mises theory collapse since Mises built it on false belief.

Speculators express their now preference to buy rights of action for profit rather than hoard their money to buy something else in an indefinite future.

Interest is a kind of income, the same as rent and as such acts in accordance to the exact same economic law. Interest is not a standalone, extra-specie phenomenon of economics that Mises, Rothbard and Böhm-Bawerk foolishly believed.

Mises had to invent foolish extra explanation — “time preference” — as if interest is somehow different. Mises made the illogical same mistake as Keynesians and Monetarists do when it comes to money.

Mises and Rothbard were blinded by their time preference foolery. The mistake their cultish followers make is to accept the foolery of time preference.

Indirect speculators (money capitalists) do not get induced by lowering interest rates to switch from hoarding for a future or spending on consumer goods now.

It’s that others who are doing other work already must get induced to switch their work preferences by lowering interest rates to switch their preference from what they are doing now to become direct speculators (material capitalists).

When that happens, ever more intellectually deficient enter into the realm of production and distribution as direct speculators (material capitalists). In short order, a cluster of error arises indirect speculators bet on the swell of newly minted inept business operators who mistakenly planned for a future that is not going to arise.

Indirect speculators (money capitalists) are already in the business of speculating, of buying to secure a profit by the future sale of a right of action after the appreciation of that right of action. That’s how they earn their living!

Capital is what I said it is already: intermediate products that yield goods. Indirect speculators sell undifferentiated capital (money) to direct speculators (material capitalists) who convert their bought undifferentiated capital into differentiated capital (material capital).

“First they ignore you, then they laugh at you, then they fight you, then you win.”

nate-m May 3, 2011 at 10:48 pm

“First they ignore you, then they laugh at you, then they fight you, then you win.”

Or much more realistically:
“First they try to reason with you, then they deride you, then they ignore you, and eventually you go away”

I only say this because when you say things like:
“Interest is not some magical thing outside of economics.”
It’s obvious to everyone that you have no understanding what your even arguing against. Nobody here believes that.

Oh, and since your so fond of posting youtube videos here is one I found of you trying to defend your logic:
http://www.youtube.com/watch?v=zKhEw7nD9C4

Peter Surda May 4, 2011 at 12:41 am

Smack,

can you, in your own words, describe what exactly is wrong with the theory of time preference, and provide an alternative falsifiable theory?

Smack MacDougal May 4, 2011 at 12:55 am

@Peter

Putting forth a falsifiable theory would be time wasting, e.g., “Some dogs live forever.” Yet, no one has talked about a “Theory of Time” as you say, Peter. So I can’t help you.

In the comments to Higgs article, I’ve put forward a clearer, simpler explanation, in my own words, for interest rates and cluster of errors that obviates the need for the foolery of time preference as expressed by Mises and Rothbard. Please enjoy my other comments to read such explanation.

Start with the first comment and go from there. It’s clear, concise, easy.

Peter Surda May 4, 2011 at 2:28 am

Smack

providing a falsifiable theory is crucial. Without it, all you have is a fairy tale.

The post you refer to indicates that you do not comprehend the essence of scarcity, which is the existence of alternatives, choice and action. Without those, there is no economy, or for that matter, anything.

Then you arbitrarily divide capitalists into money capitalists and material capitalists, without explaining in a coherent manner how to differentiate between them, but for some reason say that they behave differently. To add to the confusion, you provide a quote saying that they should behave the same.

Then you say that the Austrians say that interest is some special entity. Although I would not say that I am an expert in Austrian Economics, that is a surprise to me.

All in all, I am unsure what you are trying to say. Can you provide a coherent argument? For example, if I understand the theory of time preference correctly, to refute it you would need to show time-indifferent behaviour. Can you provide an example please?

Inquisitor May 4, 2011 at 7:39 am

“Capital is what I said it is already: intermediate products that yield goods. Indirect speculators sell undifferentiated capital (money) to direct speculators (material capitalists) who convert their bought undifferentiated capital into differentiated capital (material capital).”

Even if I accepted that definition of capital, it hinges on money being existence and therefore cannot explain interest in a barter economy, and as such is by definition a special case theory which merely seems to describe the benefit of using money… add to this the fact that you’ve not dismantled the TP theory aside from hollow ridicule and your case is looking increasingly flimsy.

Smack MacDougal May 4, 2011 at 10:39 am

@Peter

What you mean to say is can I provide an unfalsifiable theory. If what one proposes is falsifiable, then it gets proven false and is worthless. Why would anyone want to provide something false?

Higgs claimed that scarcity limits choice. Clearly, it doesn’t. Someone with $200,000 faces many more choices than someone with a mere $15,000. It’s buying power that limits choice.

Scarcity is a socialist concept. Those who claim scarcity is real believe thus:

society has insufficient productive resources

Those who accept that foolery suffer from two false beliefs.

[1] They believe in society, a collective ownership.
[2] They believe in limited productive resources.

Society is mere abstraction. It does not exist. Only individuals exist.

In any moment, even adjusting for government intervention by politicians and bureaucrats who intervene on behalf of a mythical society, the exact amount of productive resources are in play, although this amount moves in response to changes in population and expressed desires.

It is oh-so-clear throughout my writing here what the difference is between money capitalist (indirect speculator) and material capitalist (direct speculator).

Your problems, Peter, and yes you have problems is that you are intellectually lazy and that you suffer from weak reading comprehension skills.

Everything is laid out here. I am not going to re-type things to suit you without compensation. Are you going to put $160 in my Paypal account, for that is what I charge for one of hour?

Next, get someone to teach you how to better understand what you read. That is not my specialty, so you need to find someone, perhaps through Craigslist.

Smack MacDougal May 4, 2011 at 11:17 am

@Inquisitor

Exactly how does an intermediate product that yield goods stand as a special case?

Capital is any intermediate product used in production. Products yield goods. A leaf blower is a gardener’s capital. A word processor is a writer’s capital. A forge is a metal stamper’s capital. Knowledge of design is the architect’s capital. Muscle’s are the janitor’s or the athlete’s capital.

And money is an indirect speculator’s capital.

Capital is any economic quantity — material things, personal qualities, rights — used for the purpose of profit.

Money becomes capital when put to use doing these:
cash rented at interest, buying dividend paying shares, buying inventory for resale, buying seed for crops, paying wages for laborers, renting land, renting buildings, renting tools, and on and on.

In a money and credit economy, money is a kind of capital. To deny this is to bury one’s head in the sand and deny economic reality.

Inquisitor, you write,

Even if I accepted that definition of capital, it hinges on money … and … cannot explain interest in a barter economy…

Spell out your “interest in a barter economy,” Inquisitor. Define what you mean what is interest in a barter economy. Do you mean, “I’ll lend you a rooster and hen today if you give me three chickens three months hence?” Which of the chickens is the principle and which is the “interest”? HA HA HA

And then you go to spout a non-sequitur, Inquisitor:

add to this the fact that you’ve not dismantled the TP theory aside from hollow ridicule and your case is looking increasingly flimsy.

HA HA HA. The foolery of time preference has been destroyed in the concise and devastating description of interest rate changes as inducement to get persons to change their material capital preferences. The only time is now.

To deny that indirect speculators (money capitalists) exist whose business it is to buy on speculation a share of profits in hopes of increasing capital, is to deny reality.

It is hard to give up sacred cows like Mises, but vegetarians are sickly people.

http://www.beefitswhatsfordinner.com/

Enjoy and enjoy the sand Inquisitor!

Peter Surda May 5, 2011 at 2:18 am

Smack,

What you mean to say is can I provide an unfalsifiable theory.

No, what I mean to say is that I fail to comprehend a theory that you might have. But since now you claim that’s is unfalsifiable, might I remind you that unfalsifiable theories have more to do with religion than science. Without falsifiable theories, there is no point in a debate, since they are, by definition, impossible to refute. I find it very odd indeed that you accuse your opponents of dogmatism while methodologically relying on the very instruments of it.

Higgs claimed that scarcity limits choice. Clearly, it doesn’t.

Of course it does. That is what scarcity means, by definition. It is the realisation that some situations are mutually exclusive.

Someone with $200,000 faces many more choices than someone with a mere $15,000. It’s buying power that limits choice.

This is a restricted view that does not take into account the whole situation. What you prove is that individuals with different buying power have different choices relative to each other. But from the point of view of the whole system, the options available are exactly the same (assuming fiat money). Merely the profitability changes and the ownership is redistributed.

The concept of scarcity is one of the fundamentals of economics. Without it, there is no economics.

[1] They believe in society, a collective ownership.

No, this is a non-sequitur. There is no such requirement in the concept of scarcity. It has nothing to do with property rights, or humans for that matter. It is equally valid for capitalism and socialism, for animals, robots and aliens, for example.

[2] They believe in limited productive resources.

This is a sentence prone to misinterpretation. The amount of resources is the same and that is fixed. What however can be influenced by action is their value and the profitability of available options from the point of view of individuals.

Society is mere abstraction. It does not exist. Only individuals exist.

Exactly. By the same method, the immaterial (including the concept of fiat money) does not exist either, only the material does. Immaterial is a way of interpreting the material, just like a society is a way of interpreting individuals. So, your argument fails.

The rest of your argument I don’t know how to address. You manage to use an ad hominem, fail to answer a direct question and demand money. A remarkable achievement indeed.

Smack MacDougal May 5, 2011 at 3:09 am

Blah, blah, blah Petey.

What you want is a testable theory that can be verified. You do not want a falsifiable theory.

If you accept scarcity, you do not get economics. And since you worship scarcity, you do not get economics, Petey.

The earth is awash in resources. The earth is superabundant with resources. There is zero scarcity.

Scarcity is a socialist concept. It’s a Trojan horse to get marginal intellects to accept a belief of unfairness and thus justify political action for redistribution.

In economics, owing to the great Law of Prices, some of the near infinite resources available on earth get put into production and if the producers of things who use those resources are profitable — if their sales exceeds their costs — under the constraint of the Law of Prices, then the buyers of those products have held a referendum on the use of those resources, declaring the use good.

It is irrelevant that some lack the buying power to acquire those products. That some lack buying power to buy any product or that some can buy only one product or a handful of products while others can buy many times as much does not substantiate the false concept of scarcity. Those persons are suffering from having limited buying power.

If products do not exist it is only because no material capitalist can step forth and earn profit in producing such products. Scarcity has nothing to do with it.

Perhaps the word you wanted is ‘representing’ and not “interpreting” when you wrote this blabbling weirdness, Petey:

Immaterial is a way of interpreting the material, just like a society is a way of interpreting individuals.

You might want to see a qualified mental health practitioner, Petey, if you continue to believe that you can demand from others to do as you want through the Internet.

Peter Surda May 5, 2011 at 6:30 am

Dear Smack,

Blah, blah, blah Petey.

Can you be more specific?

What you want is a testable theory that can be verified.

No, I don’t want that as I consider deductive reasoning superiour to inductive.

You do not want a falsifiable theory.

Yes, I do, because without it, a constructive debate is impossible.

The earth is awash in resources. The earth is superabundant with resources. There is zero scarcity.

You use your own definition of scarcity. Scarcity does not refer to the count, kilograms or cubic metres. It refers to mutually exclusive options, maybe best represented in the metaphors like “you can’t have your cake and eat it too” or “there ain’t such a thing as a free lunch”. Or you can call it opportunity costs. It means that it is impossible to do everything simultaneously, rather making choices makes other choices unavailable.

If there is zero scarcity, then give me all your belongings. Since apparently, they are not scarce, by giving them to me you do not forgo other uses of the said belongings, so you should have no objection to it.

Scarcity is a socialist concept.

Scarcity is a natural concept. Without scarcity, there is no nature.

some of the near infinite resources available on earth get put into production and if the producers of things who use those resources are profitable

You are skipping over holes in your arguments and building a theory without a foundation.

If products do not exist it is only because no material capitalist can step forth and earn profit in producing such products. Scarcity has nothing to do with it.

On the contrary, you refute yourself in the same paragraph. The very fact that goods are not produced proves that the material that would be required for this is used somewhere else, or unused. It means that the three states of the material described (producing goods, used elsewhere, not used) are mutually exclusive. They cannot occur simultaneously. In order to produce goods, you need to homestead the material or obtain it from their owners first. Both these actions make other uses of those goods unavailable. That’s scarcity.

Perhaps the word you wanted is ‘representing’ and not “interpreting” when you wrote this blabbling weirdness, Petey:

For the purposes of my argument, there does not appear to be significant difference between them.

You might want to see a qualified mental health practitioner, Petey, if you continue to believe that you can demand from others to do as you want through the Internet.

You might want to start actually arguing instead of preaching. You have yet to provide a coherent theory, or a reply to my questions. I don’t particularly care about the ad hominems, only to the amount that they are not an argument, rather provide an insight into your emotional state, which I am not interested in.

Smack MacDougal May 5, 2011 at 7:43 am

You’re merely making claims Petey. Anyone can do it. Your counterargument proves false.

When faced with mutually exclusive choices, what forces someone to decide one choice over another is a lack of buying power. A lack of buying power arises because someone does not offer to others enough of what others want in exchange for their buying power.

Scarcity is a natural concept. Without scarcity, there is no nature.

Nature means the way of something. The ocean has nature. The ocean is superabundant, covering three-fourths of the earth.

Quit while you are oh-so-behind Petey.

Peter Surda May 11, 2011 at 1:32 pm

Smack,

You’re merely making claims Petey. Anyone can do it. Your counterargument proves false.

I make (or at least attempt to make) falsifiable arguments. Starting from a clearly formulated assumption, I continue by using propositional logic and arrive at conclusions. Any point in this procedure can be challenged, and indeed I expect my opponents to do exactly that.

You on the other hand, provide quasi-random dogmas whose source is unexplained nor they are subject to falsification.

When faced with mutually exclusive choices, what forces someone to decide one choice over another is a lack of buying power.

However, the choices are still mutually exclusive. They do not magically become simultaneously possible. If I have one apple and you want to buy two, giving me more money does not magically duplicate the apple. The difference is zero. You’d have to get the second apple from someone else. If noone has it, your plan met a demise. Extending the scope onto a larger number of people changes nothing. Zero times seven billion is still zero, it’s only easier to hide from the eyes of empiricists.

A lack of buying power arises because someone does not offer to others enough of what others want in exchange for their buying power.

A lack of buying power arises because the available options are scarce.

Nature means the way of something.

No, it refers to the world around as in the absence of human will.

The ocean has nature. The ocean is superabundant, covering three-fourths of the earth.

Yet, the ocean is still scarce. If a naughty alien came and sucked out all the water, the plants, animals and humans on the earth could not consume it anymore and we’d go extinct.

Quit while you are oh-so-behind Petey.

Start making arguments.

Smack MacDougal May 11, 2011 at 2:06 pm

What you do is put forth illogical, crazed, false beliefs Pete. That’s all you do.

You write,

They do not magically become simultaneously possible. If I have one apple and you want to buy two, giving me more money does not magically duplicate the apple.

And in all of that reveals your thoroughgoing error of thought.

When someone has choice, they get to decide between DOING two acts, such as buying an Audi versus buying a Lexus.

Not doing an act is not a choice. Buying an Audi is a choice. Not buying any car is not a choice.

If you have one apple for sale, you present one choice and not two. That is your faulty thinking rearing up, Pete.

And then you push forth, ignoring the whole of economics (which is the all matters of man regarding wealth) when you write,

A lack of buying power arises because the available options are scarce.

Again, and this time memorize it: A lack of buying power arises because someone does not offer to others enough of what others want in exchange for their buying power.

Buying power arises from wealth that one possesses to get exchanged for the wealth that another possesses.

If someone offers to trade a thing with anyone else who agrees to the terms, exchange happens. If another wants to exchange with the first but cannot come to terms because he lacks enough matching wealth, no exchange happens.

Wealth for exchange means buying power.

Few options being offered for sale has nothing to do with the the one offering to buy who lacks buying power. The one offering to buy lacks exchangeable wealth that the seller deems worthy enough to possess after exchange.

Pete, in short, you do not get at all economics.

And then you go forth with further mind confusion when you write:

No, it [nature] refers to the world around as in the absence of human will.

The world means all persons of all people everywhere on the earth. You have conflated the world with the earth and you have conflated the way of a thing — nature — with the earth.

Pete, seriously, quit. I acknowledge that you exist. Enjoy your life.

Peter Surda May 11, 2011 at 4:27 pm

Smack,

What you do is put forth illogical, crazed, false beliefs Pete. That’s all you do.

Yet, you cannot provide an example of any specific instance where this is the case. You just make sweeping assertions.

When someone has choice, they get to decide between DOING two acts, such as buying an Audi versus buying a Lexus.

This does not correctly represent my claim. Buying an Audi versus buying a Lexus are not mutually exclusive options. I never claimed that, plus it is easily disproved by showing an example of one person owning both, just like you did.

The point is that if I buy an Audi, the person who owned it before that does not own it anymore. They are the mutually exclusive options the argument refers to. Same with Lexus owned by me versus owned by someone else. The cars are what is scarce, rather than the two acts of buying. You created a convoluted misrepresentation of my claim.

Not doing an act is not a choice. Buying an Audi is a choice. Not buying any car is not a choice.

Whether you buy a car or not, someone owns it. This ownership by someone makes the ownership by others unavailable. Thus the cars are scarce.

It is so trivial yet even after several exchanges you show no sign of comprehending it. Which part is that you don’t understand or object to?

If you have one apple for sale, you present one choice and not two. That is your faulty thinking rearing up, Pete.

Sure there are two, you are merely misrepresenting the target of the enquiry. Either I have the apple or you. Whether you steal it from me or buy it or don’t care does not change that.

And then you push forth, ignoring the whole of economics (which is the all matters of man regarding wealth) when you write,

You merely repeat the same dogma and fail to address the objections that I have brought forth.

A lack of buying power arises because someone does not offer to others enough of what others want in exchange for their buying power.

This is too vague. However, you probably want to say that increasing the nominal value of currency in circulation increases the number of goods available. If this was correct, it would be possible to to show an example where printing more money duplicates goods (e.g. apples). If you cannot show such an example, your argument is unsubstantiated. Didn’t you claim earlier that claims need to be verified? So show me.

If someone offers to trade a thing with anyone else who agrees to the terms, exchange happens.

Here you admit it yourself. Exchange happens. Not creation. Apples do not magically appear out of nothingness, merely existing apples change ownership. People who had apples before now have the money, and people who had money before now have apples. The nominal value of the money does not influence the number of apples. It can only influence it if you have more than two people, but the sum for all three people is logically still zero. It’s still zero with seven billion people, it is merely more difficult to accurately determine empirically.

Pete, in short, you do not get at all economics.

Which argument specifically do I not get?

Pete, seriously, quit. I acknowledge that you exist. Enjoy your life.

You have yet to provide a coherent argument.

Smack MacDougal May 11, 2011 at 4:49 pm

You are daft to a shocking degree, Pete. Thick.

The point is that if I buy an Audi, the person who owned it before that does not own it anymore.

Duh. That’s called a purchase and sale, which transfers ownership, typically as evidenced with a title and most often involving taking possession.

The cars are what is scarce…

How laughable. 58,264,344 new cars were manufactured in 2010.

If someone cannot buy both the Lexus and the Audi its because they LACK BUYING POWER to buy both! It has nothing to do with the faux, socialist concept of scarcity.

Ownership means exclusive right of control for exchange purposes. Ownership has nothing to do with the faux, socialist concept of scarcity.

There is but one Mona Lisa on earth. That makes it rare, not scarce. That the French government owns the painting on display in the government museum makes it available reveals ownership; but again, ownership does not make it scarce as you claim, oh-so-wrongly.

Thick Petey, go get yourself a wife or girlfriend with whom you can bicker, Pete. I’m done toying with you. All of your incoherent rambling and lack of cogent argument has brought forth much chuckling though. I must put an end to your time-sucking foolery.

Peter Surda May 11, 2011 at 5:45 pm

Smack,

you continue to ignore my arguments and resort to preaching.

Duh. That’s called a purchase and sale, which transfers ownership, typically as evidenced with a title and most often involving taking possession.

Exactly. Transfers. Meaning changing the goods from one state to another, not adding a new state of goods simultaneously into existing states.

How laughable. 58,264,344 new cars were manufactured in 2010.

And each of them is scarce. I don’t see them from my window, which means they are somewhere else, which means they have mutually exclusive states.

If someone cannot buy both the Lexus and the Audi…

This has nothing to do with my argument. I already explained why. Do you actually read what I write?

… its because they LACK BUYING POWER to buy both! It has nothing to do with the faux, socialist concept of scarcity.

It also has nothing to do with my argument.

Ownership means exclusive right of control for exchange purposes. Ownership has nothing to do with the faux, socialist concept of scarcity.

Those two claims contradict each other. Without scarcity, there cannot be exclusivity. It is only possible to exclude because one state (for example, locking an apple in a safe) makes other states (for example, me eating said apple) simultaneously impossible. Scarcity means the possibility of exclusion.

There is but one Mona Lisa on earth. That makes it rare, not scarce.

If Mona Lisa was not scarce, it would be possible for it to simultaneously exist in Louvre as well as every household. Since this is demonstrably not the case (I don’t see it anywhere in my apartment, yet I recall I saw it when I was in Louvre), it is scarce.

ownership does not make it scarce as you claim, oh-so-wrongly

Of course ownership does not make it scarce. I never claimed that. Ownership is merely a system that divides the mutually exclusive states into legally permitted and legally forbidden ones.

Thick Petey, go get yourself a wife or girlfriend with whom you can bicker, Pete. I’m done toying with you. All of your incoherent rambling and lack of cogent argument has brought forth much chuckling though. I must put an end to your time-sucking foolery.

I provided clear assumptions and explanations what they lead to. You ignore them, instead retort with logical fallacies. Say whatever you want, but as a debater you’re an utter failure.

Smack MacDougal May 11, 2011 at 6:09 pm

You’re beyond thick, Petey.

And as for debate, you have failed each and every time you feebly attempted to retort. You’re an embarrassment.

Simultaneity and exclusivity have nothing to do with scarcity. You need to stop reading skiffy books and come to reality.

Good luck living in fantasy land, dude. You’re out there, way out there. Lost in space.

Peter Surda May 12, 2011 at 1:53 am

Smack,

I addressed your claims point by point. You ignored them and retorted with logical fallacies.

Smack MacDougal May 5, 2011 at 9:12 am

Here is the final word on the matter.

For those who have accepted the bogus, socialist rhetoric of scarcity, they have accepted the false belief that:

Scarcity is the fundamental economic problem of having seemingly unlimited human needs and wants, in a world of limited resources.

and

that society has insufficient productive resources to fulfill all human wants and needs

and

not all of society’s goals can be pursued at the same time

[ https://secure.wikimedia.org/wikipedia/en/wiki/Scarcity ]

The above is the typical presentation of scarcity. Notice how it goes from the implied individual to the collectivist society in a flash.

Society does not exist. Society is mere abstraction. There are only individuals and government, which consists of individuals acting in collectively.

Individuals get constrained by their buying power. Their buying power arises from the demand others yield in exchange for wealth. In short, if offer little worth, in exchange, they get little back. For in the end, wealth must trade for wealth.

Government gets constrained by the ability to confiscate buying power and by indirect speculators. When government confiscates buying power, we call that taxes. When government borrows buying power, it does so from indirect speculators. It is these speculators who limit the borrowing of government.

In any moment, what is available for purchase and sale arises because of an unseen referendum in the marketplaces. Only those things, which can get made profitably can get sold again and again. Those things for purchase and sale arise from the superabundant resources that abound on a near limitless earth.

Merely because things do not get made does not make such things scarce. That happens because it is unprofitable to do so.

When enough persons whine to those working collectively — government — government conjures rhetoric and labels for unprofitable products as “public goods.” And then government devises extra-market means for the creation of such unprofitable products.

The world is nothing more than all the persons of all the people everywhere on earth. Some of the world have more buying power than many of the world. Yet, except for unprofitable products brought forth by government, all other products come into existence because such might be profitable to do so. The continuance of their making only happens because it is profitable to do so.

Stephen Grossman May 5, 2011 at 10:06 am

>Here is the final word on the matter.

Are, then, words on the matter scarce?! This is alarming. Well, as Monty Python so wisely said, “Say no more!” (Wink, wink, nudge, nudge).

>resources that abound on a near limitless earth

But then not limitless, thus limited.

tkwelge May 3, 2011 at 9:56 pm

You clearly mentioned above that the “money capitalist” invests, or purchases future profits, rather than rolling up their sleaves and producing something. That was where I inferred that you were arguing that the money capitalist is buying the right to benefit without having to work. Here is what you wrote:

“Interest arises solely because the money capitalist buys the right to claim a part of the profits, if any exist, from the material capitalist in preference to becoming a material capitalist and attempting to produce something in hopes of profit.”

This is essentially just another way of saying that the “money capitalist” invests in order to benefit without doing any work. Am I wrong? Explain how, and without insults this time.

Smack MacDougal May 3, 2011 at 11:04 pm

Only you have said through innuendo that the indirect speculator (money capitalist) “invests in order to benefit without doing any work”.

I have not made such a silly claim.

Men (and women) seek to earn income with the least necessary effort. This is as natural as it is for water to flow down slope.

If speculation offers a chance for anyone to support oneself with less effort than needed to expend in another activity opened to that one, that one is going to choose speculation.

It is as natural for anyone to seek profit through exchange by belief in possessing superior reckoning needed for speculation as it is for the one endowed with superior physical stature to seek riches as a professional athlete.

nate-m May 3, 2011 at 11:44 pm

I have not made such a silly claim.

Your claim is that the reason why people are willing to borrow money (as opposed to spending a great deal of time earning it bit by bit) is irrelevant to how much people are willing to pay for interest on loans.

Also you claim that the abundance of a particular good is irrelevant to how much a person is willing to spend on that particular good.

Then you go onto say how people that believe that the abundance of a good and how quickly people want to build capital is somehow relevant to how a economy works are delusional morons and are clinging to archaic and obsolete belief systems.

Then you go on to illustrate in no uncertain terms that you believe that when people are insulting you it means that you have won the debate. You have indicated several times that you feel that the only valid reason people react negatively to you is that you have caused great unrest to their minds through your superior logic and deductive reasoning.

Smack MacDougal May 3, 2011 at 1:54 pm

Here’s perfect commentary about the “time preference” foolery of Mises and Rothbard.

http://www.youtube.com/watch?v=LZF2T_5L3Z8&

“This is great stuff. I could make a career out of this guy. Do you see how clever this part is? How it doesn’t require a shred of proof? In most paranoid delusions are intricate; but this is brilliant!”

Daniel May 3, 2011 at 2:10 pm
Ethan May 3, 2011 at 9:22 pm

Is this Victor Aguilar on meth?!

Bala May 4, 2011 at 12:17 pm

I really wonder why so many people take this moron Smack seriously enough to reply to him. He’s been dismantled before on his ‘one great invariant Law’ which is not even a Law, but he continues to troll around here. The best response is to ignore him. He just loves the attention.

Smack MacDougal May 4, 2011 at 12:24 pm

Oh, there’s the girly attention whore Bala, as usual, chiming in, seeking attention as all attention whores do, without useful contribution.

Oh how you amuse Bala.

Bala May 4, 2011 at 12:31 pm

And you, Smack, amuse me even more. Yout idiocy knows no bounds. You are a retard who cannot even recognise that time preference is true because it derives from the action axiom and from the simple point that people consume rather than postpone consumption indefinitely.

If you really want to dispute time preference, try disputing the action axiom. Let me lay it out for brain dead asses like you. Man acts. Action is the purposeful striving towards ends. Now prove the statement ‘Man acts’ wrong and you are sure to have a horde of followers out here.

What a freaking retard!!!

p.s. I’m sitting on a train with 4 pegs of whisky down my throat and in a good mood to have a good laugh at imbeciles like you. It’s not ‘attention’ I seek but pure entertainment. Go ahead and give me my laughs. I’m waiting…..

Stephen Grossman May 5, 2011 at 8:12 am

>Yout idiocy knows no bounds.

But then his idiocy has spread beyond him! Perhaps its better to recognize that everything is bounded.

>I’m sitting on a train with 4 pegs of whisky down my throat

Jack Daniels? Nah, you might be able to think but you wouldnt want to. Do you feel a blues song coming on?

Smack MacDougal May 4, 2011 at 12:41 pm

Bala the Parrot!

You’re most entertaining, Bala the Parrot.

Congratulations, Bala the Parrot. You managed to scape together two brain cells to memorize the phrase “man acts.” It is the sum total of what you have learned in your time as a cult member of the Church of Mises.

How many crackers did it take to train you to memorize that phrase, “man acts?” HA HA HA

And since you confess to being a drunk, Bala the Parrot, who can take seriously the addled mind of a sot?

Bala May 4, 2011 at 12:44 pm

Smack you moron,

I made a simple point. If you want to refute time preference, you need to refute the action axiom. If you can’t do that, accept that fact that you are a retard and STFU. How drunk I am is irrelevant as long as my points make sense.

However, your evasion of the answer I asked for is extremely amusing.

Bala May 4, 2011 at 12:52 pm

“And since you confess to being a drunk”

See how quickly you prove that you are a retard? I said I have had 4 pegs of whisky. That does not mean I am ‘a drunk’. It does not also mean that I am not in control of my mind either. That I am typing without errors in logic, spelling or grammar should tell you that I am pretty much in control. So how about addressing my challenge rather than using pitiable, weak excuses to run away from what is bound to expose you for what you are – a FREAKING RETARD!!!

Smack MacDougal May 4, 2011 at 12:56 pm

Bala the Parrot, the attention whore parrot, the alcoholic parrot.

Check into rehab, Bala the Parrot. Maybe, after 10 years of sobriety you might be left with enough brain cells to do something beyond parroting.

Keep amusing, Bala the Parrot!

Bala May 12, 2011 at 3:03 am

Smack you genius,

I am still waiting for your grand refutation of the action axiom. Puhleeeeeeeeeese…..

Smack MacDougal May 12, 2011 at 4:49 pm

Are you drunk again, Bala the Parrot?Mankind acts.

Wow! What insight! HA HA HA

What Mises said is equivalent to ‘trees grow skyward’ and ‘rivers flow downslope toward the ocean’. While evident and true, hardly anyone would claim such to be great insight from which laws can be deduced without ever having seen other things interact with trees and rivers.

Mises conjured his axiom and method in a rather weak attempt to justify that his thoughts on economics were the right ones and all others were wrong.

This truth seems to be lost on all the true believers of the Cult of Mises.

Mises insisted, wrongly, of course, that any economist must deduce economic “laws” through a priori reasoning, that is, reasoning about what could be the effect if we claim something to be a causal agent.

For a priori reasoning to exist, such reasoning must happen before anything happens and gets observed. Yet, Mises had been polluted by reading the works of others and engaging in living himself. Thus he could not ever engaged in a priori reasoning about economics.

Even if the method of starting from decreed axioms were a true method, Mises axiom fails.

A better axiom would be: MEN INTERACT. For anyone who gets the whole of economics knows that economics means all matters of man regarding wealth. Only those things that have exchangeability can be deemed wealth; and interaction is the essence of exchangeability.

When it comes to economics, the empiricists have won the day. For it takes observation of men interacting to see outcomes from interaction through time from which to divine the natural laws that govern such interaction.

Banished from real academician endeavors, Mises needed to conjure up his own field “praxeology”.

Countless works on economics that came decades before Mises and from which Mises lifted many of the ideas he tried to pass off as his own contain the kernel of the claim that man acts. Read any work that deals with marginalism or Gossen and his discourse on satisfaction.

Stephen Grossman May 12, 2011 at 8:41 pm

Mises ,in fact, induced his axioms, eg ,man acts, from concrete reality but he was a Kantian and thus thought, rationalistically, that his axioms needed to originate in his mind. He and other Austrians have explained and predicted the power of the market and the destructiveness of intervention. Keynsians have a miserable record here. See _Objective Economics: How Ayn Rand’s Philosophy Changes Everything About Economics_ by Dr. M. Northrup Buechner at the website, Objective Economics. It has a discussion of induction as basic to economics.

You deny “man acts” but then affirm it.

>When it comes to economics, the empiricists have won the day. For it takes observation of men interacting to see outcomes from interaction through time from which to divine the natural laws that govern such interaction.

Empiricism is mere description of regularity, of coincidences, the mentality of pre-scientific man before causes, logic, and systematic thinking were discovered by the Greeks, especially Aristotle. Menger was an Aristotelian. Statistics tells man what is but not that it had to be that way. Counterfeiting money causes price rises but economics cannot predict the particular price rises because man has volition and chooses concretely differently in different concrete situations. Bernanke knows many statistics of the Gr. Depress but knows no causes. Empiricism is a miserable failure leading only to a shrinking of the mind and, eventually, back to mysticism in an attempt to integrate knowledge into a whole without mind. Both rationalism and empiricism accept the mind/reality split but from different sides. Concretes w/o system are worthless. And so is system w/o facts. Economics provides laws. Economic history provides statistics.

Bala May 13, 2011 at 1:20 am

Smack you Genius,

Firstly, mankind does not act. It takes a very special moron (which you are) indeed to make that asinine statement. It is individual man that acts.

Secondly, the ‘insight’ comes not from the statement ‘Man acts’ itself but from the application of deductive reasoning starting from that indisputable premise. The method (which retards cannot understand) is this

If A is true, then B is necessarily true. If B is true, then C is necessarily true and so on.

Since A stands for the action axiom (which is irrefutably true), the rest of the conclusions of Austrian thought are also true.

For example, since action is defined as the purposeful striving towards ends, we say man strives purposefully towards ends. Since reality dictates that man cannot satisfy mutually exclusive ends simultaneously, he must be choosing one end over another and thus ‘valuing’ one over the other. Further, action requires that man applies means to attain ends. The purposeful nature of action also requires that man must necessarily have a belief in a causal relationship between his action, the means he chooses to apply, the ‘recipe’ he chooses and the attainment of the end for without that, the action would not be purposeful. That man necessarily values and ranks ends and applies means to attain them means that he values and ranks means as well. That he necessarily believes in the causality between the means and the ends and ranks means means that he necessarily values different means in terms of their serviceability in the attainment of his ends. I could go on and on, but I don’t have all day for retards.

Which part of this is beyond your pea-brain?

Thirdly, let us first be clear about whether Economics is a social science or a natural science. This is important because empiricism, which is a method distinctly suited to the development of the natural sciences whose subjects are inanimate matter without a will of their own, is absolutely unsuited for the social sciences whose subjects are living things with a volitional consciousness. Empiricism can work where the regularity of the past can be expected to recur in the future. No such claim may be made in the social sciences. Therefore, it takes an absolute dunderheaded coconut to claim that empiricism is the most appropriate method of the social sciences.

And finally, why haven’t you left once and for all for reason.com?

Stephen Grossman May 13, 2011 at 12:17 pm

>the ‘insight’ comes not from the statement ‘Man acts’ itself but from the application of deductive reasoning starting from that indisputable premise. The method (which retards cannot understand) is this

If A is true, then B is necessarily true. If B is true, then C is necessarily true and so on.

Since A stands for the action axiom (which is irrefutably true), the rest of the conclusions of Austrian thought are also true.

Science is basically induction based on conceptualized observations, not deduction. See David Harriman’s _Leap of Logic_. And deduction is valid only as based on induction. Arbitrary ,subjective axioms are not a base for deduction but merely faith.

Bala May 13, 2011 at 12:32 pm

“And deduction is valid only as based on induction. Arbitrary ,subjective axioms are not a base for deduction but merely faith.”

Yup. I do understand this bit. Unless you are saying that the action axiom is not based on induction (which I think you are not), I suspect we are saying the same thing.

Stephen Grossman May 13, 2011 at 1:41 pm

The action axiom is a conceptualized observation but Mises erred in thinking that it was from consciousness prior to observation (perception). Its a concept, prior to conceptualized causes, ie, prior to induction. Induction is induction from action and other concepts. Perception->concept->induction->deduction. See Rand’s _Intro. to Objectivist Epistemology.

Empiricism is mere regularity without conceptual integration ,ie, A happened, B happened, maybe they will happen again, who knows, reality is random, without identity and causality. Statistics gives empiricism a superficial scientific plausability. Statistics is an ape in a lab coat. OK, that’s exaggerating but it makes a point. Statistics can never give causes. Even a 100% coincidence is not a cause. Statistics can identify a possible cause and even then the statistics must be based on a prior known cause. The arbitrary has no place in knowledge and is destructive of the mind’s contact w/reality. Correlating moon phases with horse races can be done but its arbitrary since there is no evidence to even suggest a possible causal link. Science requires conceptual hierarchies based on perception at every level. Every new concept guides us to new perceptions, which, in turn, are integrated into new concepts. See the history of classical science from, eg, Bacon, Kepler, Newton, Faraday. Modern science is a chaos of facts and invalid methods and arbitrary theories, eg, parallel universes. Philosophy guides science for good or ill.

Bala May 13, 2011 at 9:42 pm

“Perception->concept->induction->deduction.”

This is an erroneous version of what Rand has said in ItOE (since you referred to it). The correct one is

Percepts -> Reasoning (Inductive) -> Concepts -> Reasoning (Deductive) -> Definition

The ‘concept’ out there could be concepts of existence or of causation, but to say that concept formation happens prior to reasoning is fundamentally erroneous (i.e., contradicts Rand’s explanation in ItOE).

Bala May 13, 2011 at 1:46 am

Smack you Genius,

“A better axiom would be: MEN INTERACT.”

This time, I really demand my laughs. Please explain why this statement is axiomatic at all.

Smack MacDougal May 13, 2011 at 12:40 am

What makes you believe that all economic thought must come down to a slugfest between the Misean Austrian School of Neoclassical Economics and the Keynesian Neoclassical Synthesis, Stephen? Both camps fail to get economics.

Stephen, falsely, you claim:

You deny “man acts” but then affirm it.

When I’ve done no such thing. Mises’ axiom yields nothing for economics. Furthermore, a better axiom would be: MEN INTERACT. A man who awakens and performs push ups acts but that man does not engage in economics. Only men who interact by exchanging wealth engage in economics.

And then Stephen, falsely, you claim:

Empiricism is mere description of regularity, of coincidences, the mentality of pre-scientific man before causes, logic, and systematic thinking were discovered by the Greeks, especially Aristotle.

Of course, empiricism is none of that. Philosophical empiricism asserts that knowing comes only through sensory experience. Empiricism arose in the 17th century from the thought of Francis Bacon and Rene Descartes and later Thomas Hobbes as well as Baruch Spinoza added to the doctrine. During the 18th century, those who espoused empiricism were John Locke, George Berkeley, and David Hume. It was Hume who argued that inductive reasoning amounts to circular argumentation. Even Aristotle himself was the first to suggest the tabla rasa.

The scientific method demands that all evidence get be empirically based (dependent on observation by the senses). In short, the empiricist must have working hypotheses that are testable using observation or experiment. All claims must be subject to and derived from our experiences or observations.

And then you go forth and make yet another false claim:

Economics provides laws. Economic history provides statistics.

Human nature provides natural laws. Men try to enforce artificial laws, which they conjure in vain effort to circumvent natural laws.

Economics means all matters related to man regarding wealth. It is through study and coming to know these matters that a man can see how both natural laws and man-made laws affect how men interact through their exchangeable (economic) quantities.

Statistics means data about the state of affairs. History means the result of men applying power. Economic history has nothing to do with statistics and everything to do with how men with power have applied their power to affect the exchange of wealth among men.

Oh and Stephen, ask any speculator or investor if he wants to decide and lay down his speculative bets either from Misean axiomatic dreaming (a priori reasoning) or from observed human action that repeats in pattern (empirically based human action).

Stephen Grossman May 13, 2011 at 2:19 pm

Classical econ included values as out there in reality. This was rejected by Austrians for values as reality relative to man. Rand goes one step further and relates reality to man’s life as a rational animal, not to arbitrary purposes.

>I’ve done no such thing [as claiming that man acts]

“the kernel of the claim that man acts” is from one of your earlier posts. And, hierarchically (both metaphysically and epistemologically), interaction is based on action. Further, economics extends to and starts from isolated individuals who face (temporally) limited resources and virtually unlimited wants. Then it goes to a market. Starting from interaction confuses society w/reality, a Marxist error.

Empiricism, a reaction against the equal absurdity of rationalism, gets prestige from the discoveries of observation-based ,classical science. But empiricism drops the conceptualizing and inductions of classical science for mindless counting and coincidences and arbitrary hypotheses, arbitrary observations ,arbitrary measurements, arbitrary experiments and arbitrary theories. Bacon, who properly rejected logic-chopping, scholastic,rationalism, did not fall into empiricism. He was an Aristotelian concerned to conceptualize observations and to induce from concepts. He discovered the importance of systematic induction and systematic experiment. See John McCaskey (web site) on Francis Bacon and on Aristotle’s induction.

Keynes lost his shirt investing prior to the Gr. Depression while Mises refused a job with the Austrian state bank because, knowing a depression was coming. He knew that tech progress lowers prices and that 1920s prices were stable in a time of tech progress. Thus govt was inflating a boom that would bust. He did not want to be associated with any inflating govt. Anyway, economists do not need business competence to be scientists. And businessmen dont need to be economists. Businessmen profit from concrete situations. They do not need to explain the cause. Gates and Buffet are now semi-socialists despite their business competence.

What is your school of economics?

Smack MacDougal May 13, 2011 at 1:58 am

Bala the Parrot, the attention whore parrot, the alcoholic parrot.

Mankind means any random man. Saying mankind acts is the same as saying ‘a man acts’ or ‘that man over there acts’ or ‘every man you are apt to meet, short of a brain dead one like Bala acts’.

If A is true, then B is necessarily true. If B is true, then C is necessarily true and so on.

The problem for Mises is by the time that he gets to D, he gets D wrong and thus his conclusions are wrong.

No one can deduce merely by assertion from their inner consciousness the laws of economics. Yet, this is what Mises claims he has done. How laughable.

Only from strict investigation that involves observation of action and outcome can anyone put forth solid argument formed on facts.

As a lifetime, talking shop academician who never had capital at stake in any production process in speculation of earning capital, Mises lacked any experiential knowledge on all things interest, capital, profit. Thus, it does not surprise that Mises conjured up time preference foolery as expression of his ignorance over such matters.

Mises was a 10th rate hack faux economist and philosopher who lifted from others every idea he ever wrote. Mises tried to mash up a philosophy, sociology and economics into one story and he failed, ridiculously.

Keep worshiping as a member of the Cult of Mises, Bala the Parrot. Have you called about rehab yet?

Bala May 13, 2011 at 2:05 am

Smack you Genius,

“Saying mankind acts is the same as saying ‘a man acts’”

Nonsense, you moron. It does not. Further, ‘A man acts’ is NOT the same as ‘Man acts’. ‘Man’ stands for the concept ‘man’ and ‘A man’ refers to a particular man. I understand that retards cannot get this concept. So I won’t be too hard on you.

“The problem for Mises is by the time that he gets to D, he gets D wrong and thus his conclusions are wrong.”

Hey, genius! Please do specify explicitly and unambiguously what that ‘D’ which Mises got wrong is. I am dying of anticipation!!!!

The rest of your post is so laughably idiotic that I wouldn’t bother responding to it.

Bala May 13, 2011 at 2:12 am

Smack you Genius,

“No one can deduce merely by assertion from their inner consciousness the laws of economics. Yet, this is what Mises claims he has done. How laughable.”

What’s really laughable is the extent of your idiocy. It is not mere assertion from his inner consciousness. The concepts ‘Man’ and ‘action’ are formed inductively by applying reasoning to the sensory material received from existence and where ‘action’ is identified as an attribute of the concept ‘Man’. That you have to accept its validity to even attempt to prove it wrong is what makes ‘action’ an axiomatic concept and the statement ‘Man acts’ an axiom.

The simple point which retards like you can probably never grasp is that Economics is the study of exchange. Exchange is a particular human action and hence can and should only be studied starting from the action axiom. To derive laws of economics from empirical observation of particular human action is sheer lunacy (which you display a lot of).

Now!! Run away to reason.com. At the double.

Bala May 13, 2011 at 2:17 am

In fact, I would go on and say that all exchange is fundamentally an action (just as all action is an exchange).

I guess such obvious stuff is too much for pea-brains like yours. Sorry for assaulting your dead brain with far more than it can ever handle.

Smack MacDougal May 13, 2011 at 2:13 am

Bala. Whatever your real name is. Take these words to heart.

You have yet to write words that are not laughable and the expression of idiocy. Yet, that is not what is important here.

You above all others suffer the hardest effects of cognitive dissonance, displaying reckless, enraged, uncontrolled behavior.

The volatile combo of alcohol abuse and poor upbringing has made you intensely unstable. All who interact with you, face-to-face, should ignore you until you get the help you need oh so desperately.

Bala May 13, 2011 at 2:18 am

Smack you Genius,

That you care not to answer my arguments and attack me instead shows you up for what you are.

Now!! Run away! And never return!!!!

Smack MacDougal May 13, 2011 at 2:19 am

Poor, drunken Bala.

To quote myself from a long ago comment on the board:

A better axiom would be: MEN INTERACT. For anyone who gets the whole of economics knows that economics means all matters of man regarding wealth. Only those things that have exchangeability can be deemed wealth; and interaction is the essence of exchangeability.

And then lagging behind in a drunken stupor, you write:

The simple point which retards like you can probably never grasp is that Economics is the study of exchange.

As you can see, you are learning from me Bala, as I have schooled you on that point exactly.

Oh how you amuse, Bala! Keep amusing! You are most entertaining as a drunk!

Bala May 13, 2011 at 2:24 am

Smack you Genius,

“A better axiom would be: MEN INTERACT.”

And as I asked you earlier, Genius, please explain why this mind-blowing statement of yours is axiomatic at all.

“For anyone who gets the whole of economics knows that economics means all matters of man regarding wealth.”

Nonsense.

“As you can see, you are learning from me Bala, as I have schooled you on that point exactly.”

How the hell did you come to the conclusion that I needed YOU to school me on that point? What unbridled arrogance! The only possible cause of this can only be unfathomable idiocy.

Once again…. Why have you not run away to reason.com? Are you not a man of your word?

Bala May 13, 2011 at 3:57 am

Smack you Genius,

“Only those things that have exchangeability can be deemed wealth; and interaction is the essence of exchangeability.”

Omigosh!!! Do you realise the enormous stupidity of this statement combined with your asinine claim that economics is the study of wealth? I am sure you do not, for why else would you make it?

And drunk or not, you are definitely not an entertainer, just an irritant. You don’t amuse either. You just keep braying in your typical asinine way giving everyone around a splitting headache.

Smack MacDougal May 13, 2011 at 11:10 am

All you are is a name caller Bala. The world sees this about you.

Enjoy your false beliefs, Bala. I’m not here on earth to save you. No one is going to pay me to shake you from your many false beliefs about economics and more importantly, about yourself.

However, it’s nutty people like you who turn away far too many from Individualism and Freedom, from anything associated with Lew Rockwell.

You ought to think long and hard about why you comport yourself the way that you do. And then you ought to find the courage to change yourself.

Bala May 13, 2011 at 11:24 am

Ha Ha Ha!! So you have nothing concrete to say to refute any of my objections. You have nothing to show for my challenge to identify what that ‘D’ is. You have nothing to say for my dismissal of your claim over the validity of empiricism in the social sciences. You have nothing to say about my dismissal of your anti-definition of economics as ‘everything to do with wealth’.

You are a cry-baby! A whiner! You are an empty vessel who likes to throw venom at others and when some one throws it back at you, you run and hide behind your mother’s skirt. Your claim to any understanding at all of economics has been demonstrated to be completely hollow by just too many people on these pages for anyone to keep a count. It is amazing how you keep at the task of spraying your fallacies.

Carry on, Genius. reason.com is waiting for you with open arms.

Bala May 14, 2011 at 4:15 am

Smack you Genius,

Just go through this to understand what I am doing :)

http://blog.mises.org/16940/dealing-with-windbags/

Smack MacDougal May 13, 2011 at 11:32 am

Bala, sadly, no doubt, for those around you in real life; they must suffer your ignorance and gung ho idiocy.

I’ve little interest in getting into a name calling spat with a loser like you, Bala. You’re such a whiny bitch who is not worth it.

Time preference foolery, socialist scarcity foolery — all of that has been destroyed. The correct definition of economics; the true, great, invariant Law of Prices; the proper understanding of interest as income — all of that has been given.

Oh how you amuse Bala. Enjoy your false belief existence as an eating and shitting machine.

Bala May 13, 2011 at 12:30 pm

Smack you Genius,

“Time preference foolery, socialist scarcity foolery — all of that has been destroyed.”

By arbitrary assertions by the Genius.

” The correct definition of economics; the true, great, invariant Law of Prices; the proper understanding of interest as income — all of that has been given.”

Ha Ha Ha!! And I have shown that your two of the above are nonsense. And the third is nonsense because your dismissal of time preference is nonsense as well.

Run away to reason.com. You are polluting this place.

Stephen Grossman May 4, 2011 at 2:28 pm

>an artificially reduced rate of interest leads business firms to invest in the wrong kinds of capital, in particular the longest-lived capital goods, such as residential and industrial buildings, as opposed to inventories, equipment, and software with a relatively short life.

I thought the essential difference was between producers goods and consumers goods (altho Ive read that houses may be difficult to categorize). But youre saying that govt does not shift capital from consumers goods to producers goods, that its only a shift within producers goods within a time range. Im confused.

Smack MacDougal May 4, 2011 at 2:41 pm

Your confusion is understandable Stephen. Higgs has it wrong.

The effect of lowering of the interest rate for consumers has consumers shift their now preference from buying other things to buying houses through credit.

The effect of lowering of the interest rate for those not already producing as successful direct speculators (material capitalists) has them shift their now preference from whatever they were doing to becoming house builders.

When interest rates lower, it is the indirect speculators (money capitalists) who invest in the wrong kind of people, who, in turn, indirectly (consumers) and directly (material capitalists) invest in the wrong kind of capital.

Those who worship at the Church of Mises have it all wrong. Their belief in the Saint of Time Preference blinds them from truth.

nate-m May 4, 2011 at 3:14 pm

You seem to think that explaining some really obvious things how the market works somehow shows that it conflicts with the Austrian theory of why interest was created or how it works.

Except it doesn’t.

Nothing you just said, that is actually factual, in any way conflicts with anything Mises or other Austrians say.

It’s like saying:
“See you don’t understand: Grass is a living thing that grows and unless you mow it with a lawnmower then it will grow very long. This is why Toro lawnmowers are the best”

Non-sequiturs abound.

Stephen Grossman May 4, 2011 at 3:42 pm

>Their belief in the Saint of Time Preference blinds them from truth.

Your examples are implicitly and basically variations of time. If not time, what?

Smack MacDougal May 4, 2011 at 4:00 pm

Your examples are implicitly and basically variations of time.

Exactly how are my examples implicitly based on time and mere variation of time, as you claim?

Stephen Grossman May 4, 2011 at 5:00 pm

>Exactly how are my examples implicitly based on time and mere variation of time, as you claim?

Modern thought, whether Hitler, Keynes or Marx, has reduced man from a rational, planning animal to the “now” of bodily characteristics, economic intuitions and animal spirits. And, of course, irrational, human animals need masters, not in the sense of a farmer who takes care that his chickens lay eggs, but of a Bernanke who careens from from one arbitrary, pseudo-scientific experiment with other people’s limited resources to another. Thus the liberal claim that America’s $14 trillion debt is unreal because _now_, this moment, cut off from past and future, there still remains some private money to be altruistically looted for the bloody, depraved, mystical, death-oriented “common good.” And when that’s gone? Empty speculation, mere ideology. Pragmatists (addicts, prostitutes, dictators) solve this moment’s problems with this moment’s solution.

Smack MacDougal May 4, 2011 at 5:11 pm

Yes, progressive liberals are fools. You state the obvious.

Yet, your diatribe about the philosophical doctrine of modernism fails to answer: Exactly how are my examples implicitly based on time and mere variation of time, as you claim?

Would you like to try again?

Oh, and you seem to be lost over pragmatism, for Bernanke is a pragmatist!

Pragmatism is living by putting theories into action (Quantitative Easing, QE2) for finding one’s way in living. Pragmatists claim they are involved in “intelligent practice.”

Pragmatists oppose a priori reasoning as a basis for philosophy in action, which they accuse those of realism and idealism of doing. Rather pragmatists champion continual adjustment of action from conclusions drawn by applying the scientific method — or so they claim, anyway.

Stephen Grossman May 4, 2011 at 9:03 pm

>Exactly how are my examples implicitly based on time and mere variation of time, as you claim?”

Eg, “consumers shift their now preference from buying other things to buying houses through credit.” Implied is the non-credit buying of other things. But consumers promise to earn enough in the future to pay for the credit in the future. Even a future-and-past-evading drug addict knows the penalty of failing to pay for credit from his dealer.

Even you consider “now” to distinguish it from past, future and the flow of time. Time is part of man’s consciousness of the concrete, changing, material universe. Note my denial of time as subjective or real. Time is objective, part of man’s conceptual consciousness _of_ reality. Time is the conceptual consciousness of perceived changes of the concrete, material universe. Time is relating changes to each other.

Sitting Duck died bravely many moons ago. This Cobra 427 goes 220 miles per hour along the Mulsanne Straight at Le Man (w/hour a consciousness of change related to other changes thru a hierarchical chain of conceptualized, perception-based changes). Man relates various changes to each other and even integrates these changes with science, including math (relating many things to one, perceived, concrete thing ,eg, miles to a foot). Thus man has intercepted a meteor’s complex motion with a rocket from Newton’s discovery of definite relations among motions.

There is no total, permanent escape from action in time and the time- consciousness of concrete reality while man is alive and not in a coma. This partially explains chronic anxiety and chronic depression, warning signs of, in part, the unrealistic attempt to evade the time-consciousness of concrete reality. Theres always some conciousness of time, regardless of evasion. In fact, the evader rationalizes partly because he’s conscious of time.

A hunting-gathering or foraging economy is closest to the brute animal’s consciousness only of your mystical/modernist god, the eternal now. But primitive savages are conscious of regular star motions and relate them to food animal migrations at certain locations which require a certain number of sun revolutions to reach by walking. A street thief or a Keynsian, on the other hand, attempt to maintain, with varying success, only a present consciousness. The loot is there, in that woman’s handbag or that millionaire’s bank account. How did it get there? Somehow. Somehow man moved from consumers’ goods to producers’ goods. Will there more loot? If sufficient brute force is applied. Will brute force discourage production? Who is John Galt? We have food and drugs for today.

What did Mrs. Heidegger say to Martin? “No, it’s being _on_ time!

It’s time to go. Now. It’s my preference.

Smack MacDougal May 4, 2011 at 3:39 pm

Of course, the Mises Church body would have you believe that all who are in business are astute businessmen and businesswomen who have been duped into borrowing to buy a unique kind of material capital, which exists only in the minds of Miseans, that yields return only in some far off, mythical future.

In never dawns on those of the Mises Church body that many earn some their income from indirect speculation while some earn all of their income from indirect speculation; and that for those who earn any income from indirect speculation, they do so by buying a right of action to share in profit and they do so in the right now.

Indirect speculators express their preferences in the now, always, and never in any future, and certainly not in the past, which is impossible. Indirect speculators choose to speculate with money capital rather than work with their own labor capital or produce through their own material capital. It’s not time that induces them to do so, but merely their preference, their want to do so and always in the now.

So these Miseans of the body fail to see that it is indirect speculators who make bad bets after inducing an ever increasing size of ineffective humans to become direct speculators that gives rise to Rothbard’s “cluster of errors”. Instead, Miseans of the body see only secondary effects long caused by a primary one.

Laughably, Mises said

Interest is not the specific income derived from the utilization of capital goods

And yet that is all interest is. Interest is money gained through time (income) and it arises as a share of profit.

Because Mises spent his lifetime as a talking shop academician and not as an indirect speculator or even a direct speculator, Mises suffered from false beliefs about things related to profit, such as interest. This led him to believe an accept a crazed, out there time preference theory, one not needed at all to explain economics.

Those who worship at the Church of Mises suffer from the flaw of never feeling embarrassed, although they should for the false idols they worship and false beliefs they have accepted.

Stephen Grossman May 4, 2011 at 4:26 pm

>Indirect speculators choose to speculate with money capital rather than work with their own labor capital or produce through their own material capital. It’s not time that induces them to do so, but merely their preference, their want to do so and always in the now.

Are you claiming that the desire for immediate action, not a response to interest rates, explains investment? But investment is a rejection of immediate consumption for investment in the future. And are you restating Keynes’ animal spirits?

Smack MacDougal May 4, 2011 at 5:00 pm

Have you bothered to read all the comments from top to bottom, Stephen? For if you did, you would have read the answer already of which you seek, thus obviating the need for you to ask.

Speculation is a purchase in the now, a purchase of a right of action. Nothing gets postponed. Claims about the future are illusory.

In the Fantastical World of Misean Economics, buying power magically gets bestowed on everyone. Thus, Mises preaches the silliness that everyone gets faced with a choice, consume until infinity or death, whichever comes first, or live like an ascetic, suffering through deprivation by “investing”.

Mises ignores that persons must earn a living. In doing so, those blindly worshiping Mises ignore as well.

Among the real world, beyond the fantasy world of Misean economics, everyone needs to earn their living, excluding those getting welfare doled from politicians and bureaucrats. While some express their preference to earn their living through labor and others express their preference to earn their living through manipulation of differentiated capital (material capital); some express their preference to earn their living through manipulation of undifferentiated capital (money capital).

In short and this is the last time I shall express it on the board for the oh-so intellectually lazy that seem to comprise the bounty of the body of Church of Mises, interest arises only as a share of profit; interest rate changes arise to induce changes in the now preferences of capital application (labor vs material vs money).

Your weak attempt at ad hominem through innuendo by suggesting that Keynes has something to do with me, amuses, Stephen.

Animal spirits. HA HA HA. Keynes was another fool, the same as Mises; but what should anyone expect from lifetime academicians lacking any experience with profit, capital, interest?

Stephen Grossman May 4, 2011 at 5:27 pm

>Speculation is a purchase in the now, a purchase of a right of action. Nothing gets postponed. Claims about the future are illusory….live like an ascetic, suffering through deprivation by “investing”.

There it is, the dead end of nihilism ,ie, of this moment’s willfully destructive whim, against which Atlas is shrugging. Whether this writer is a drunk in a gutter or the chair of an economics dept, the immediate moment ,the _now_, is his only reality. This is man without mind, the end of the West, of America, of scientific-industrial civilization. See: modern “art.” Economics is a need of long-range production, not of this moment’s smash and grab. Thus his destruction of economics.

Ethan May 4, 2011 at 6:12 pm

Dang, he headed over to Reason already. Well, I liked your reply, anyhow.

Drigan May 4, 2011 at 3:44 pm

We *really* need the ‘ignore’ option on this site for some jokers. I’m sure you’ll all agree that this thread is a classic demonstration of this.

I can’t think of anyone else who has so completely ignored all arguments and reason so completely. Several people have been unreasonable on a few posts, but this is amazing.

Smack MacDougal May 4, 2011 at 3:56 pm

We need to stifle any dissent that would expose our cult our indoctrinating false beliefs. Otherwise, our cult members might become de-programmed and discover our scam. They might abandon us and then how are we going to earn a living, honestly? How can we get cash donations and fools to buy our long-dated false bibles of economic fakery?

Of course, it has been easy for us to establish our cult, the Church of Mises, because there are millions of confused, lost souls, who, as outcasts, longing to become loved as they so feel unloved and hurt by all whom they know; and owing to their failing of characters, blame others for their lack of successes. It is easy to tap into such anger, leading them to believe that we know who are to blame!

So we spin tales of evil bankers and evil others to forge group cohesion.

And when anyone from outside threatens to expose our scam, our con, with truth; our mind-controlled, deeply indoctrinated, attack assassins, who seek the greatest praise and approval because they have been the most hurt in real life, come to our rescue.

Ah, life is grand as a church elder of the Church of Mises.

Stephen Grossman May 4, 2011 at 4:31 pm

>Ah, life is grand as a church elder of the Church of Mises.

And, yet, Austrians don’t exist in the mainstream media.

Smack MacDougal May 4, 2011 at 4:03 pm

I am heading over to Reason.com, where the smarter hang out.

Peace.

“I’m trying to free your mind, Neo. But I can only show you the door. You’re the one that has to walk through it.” ~ Morpheus

“Free your mind.” ~ Morpheus

Donald Rowe May 4, 2011 at 10:10 pm

Quotes are all taken from previous comments by Smack MacDougal:

“Again, the Law of Prices holds that the winning bids of demand in the face of supply set the price.”

“Thus all should come to see at once the great working of the Law of Prices as the one true law that girds under the whole of economics.”

“Value results from the expression of a ratio of importance between two commodities. When one of two things in exchange is money, we give value another name — price.”

Smack explains the whole of economic theory very clearly, neatly and simply. It takes a true genius to accomplish that so easily and once it is done all the rest of us can enjoy the simplistic beauty of the results. And not have to strain our brains. He has simply made life so much easier for us all that we owe him a great debt of gratitude.

You see it all hinges on the price, the highest price is the best, that is the price that wins the auction, every time. And that price is what sets the price! So don’t bid low or you will lose out to a higher bid. You’ll just be wasting your time by bidding too low. Don’t you see how simple it is? You can buy most anything with your money if you have enough of it and you will just bid high enough, and if you don’t have enough or bid high enough then that’s too bad. Try harder next time, maybe you too will have an endless supply of money yourself — next time around. Then you too can reap the benefits of loaning some of your money first to a bunch of winners for a high interest rate and then to a bunch of losers for a lower interest rate. And then your pot of money will just keep growing and growing until, well I don’t really know how long — probably forever.

In your next life you will not want to waste so much time on this fooforall.

Smack MacDougal May 4, 2011 at 10:27 pm

Well Donald, the winning bid need only be the maximum bid of all bids. The bid itself need not be much to win. Many times, a low outlay wins the day as supply is abundant and bidders few. One only need look to the market for parking lot attendants at stadium-hosted sporting events to see this is so.

So while your facetious tone brought joy to me when I read your words, the highest price is the best, that is the price that wins the auction, every time; your failed to grasp the one, true, great, invariant law of the whole of economics — the Law of Prices.

Smack MacDougal May 4, 2011 at 11:26 pm

Yet, in truth, why most lack money to win any bidding is that they cannot acquire money. They cannot acquire money because they do not offer what others want.

So who is to blame? Do you fault the others whose desires and expressed preferences do not match with your loser? Or do you hold responsible the loser who stubbornly refuses to strive to produce something wanted by others?

And while many losers have lost in the DNA Sweepstakes of the Universe, many more still have lost because of the weaknesses of their characters. Easily, they get dragged along by the siren songs of greed (wanting something for giving nothing, e.g., welfare collectees), jealousy and sloth.

In truth, their cost of living production exceeds their sales of human exchange as it gets expressed in all its forms. Thus they are not profitable. And those who cannot become profitable, in short order get put to ruin.

Yet, rather to improve their characters, they follow those who are winners in the DNA Sweepstakes but who suffer from another kind of mind disorder. We call such men and women politicians. They lead the deficient mob to gang up on the mass of unorganized individuals. In short, they see that when they cannot gain in the marketplace, righteously, by offering what meets the desires of others; they decide to take by force.

Stephen Grossman May 5, 2011 at 8:35 am

>[Smack MacDougal]If you accept scarcity, you do not get economics.

Scarcity exist relative to man’s unlimited wants ,thus economics. I can afford to pay for food, shelter and clothing or spend all my money on lottery tickets, but not both. A man lost in the wilderness has a scarce amount of time to find other, unlost people, make a weapon, find water and food, and find or make a shelter. Time scarcity also means that he must first so the thing most important to his survival or he will die. He cant do all at once. Man can increase the amount of a thing but then its still scarce in the new amount relative to man’s unlimited wants. Oil fracking increases available oil but its still a definite amount relative to man’s unlimited wants.

Socialist scarcity is valid relative to man’s alleged inability to increase the amount of anything (except scarcity and misery).

Smack MacDougal May 5, 2011 at 9:26 am

I can afford to pay for food, shelter and clothing or spend all my money on lottery tickets, but not both.

Yes, that is a problem of buying power, not scarcity. Food is abundant. Shelter is abundant. Clothing is abundant. Lottery tickets are abundant. It’s your lack of buying power that constrains you.

A man lost in the wilderness has a scarce amount of time to find other…

It’s the lost person who faces a survival limit. The man searching for him hopes to find him before that survival limit gets reached. There’s no “scarce amount of time.”

man’s unlimited wants

While humans wants seem many, the claim that such is unlimited is bogus without proof.

For you could take a random sample of persons on earth and have them list all of their wants. In less than a day, most would run out of ideas. And since a suitable random sample could be projected to the whole of population of the earth, it is easy to see that humans have limited wants.

It is right to say that perhaps there are limitless possibilities for products that humans have yet to make or make profitably, but to suggest that humans have limitless is here rhetoric.

Stephen Grossman May 5, 2011 at 9:54 am

>It’s your lack of buying power that constrains you.

Buying power, a resource, is scarce, limited. Even Bill Gates can’t buy everything.

>Food is abundant.

Abundancy is scarce. And dont forget pre-industrial famines.

>There’s no “scarce amount of time.”

Relative to wanting survival, time is scarce. Relations among things requires contextual knowledge.

>In less than a day, most would run out of ideas.

A man in a cave has certain wants. If he builds a mud hut, he has more wants. If he builds a condo, even more wants. Etc. This is unlimited.

Smack MacDougal May 5, 2011 at 10:10 am

Buying power, a resource, is scarce, limited.

Trees for timber are resources. Fish schools in the seas are resources. Soil for crops are resources. Metals inside mountains are resources.

Buying power is not a resource, although acquisition and possession of resources yield a source of buying power.

time is scarce

Living is finite for the individual. Time is infinite. Time is limitless.

A man in a cave has certain wants. If he builds a mud hut, he has more wants. If he builds a condo, even more wants. Etc. This is unlimited.

Every man gets constrained in the moment by his beliefs. His beliefs limit him. Beliefs arise from experiences. No man already possesses unlimited experiences. Thus no man has unlimited beliefs.

Every man has the capacity only for a succession of limited beliefs. Every man’s wants arise from his beliefs. Since every man has limited beliefs in any moment, every man has limited wants. Thus wants are not unlimited.

Stephen Grossman May 5, 2011 at 11:08 am

>Buying power is not a resource, although acquisition and possession of resources yield a source of buying power.

Resource in the widest sense, as something potentially useful to satisfy wants. And money, a type of buying power, is a resource.

>Time is limitless

Youve dropped the context, time relative to wanting survival (or wants in general). Relative to what I want today, my time is limited. You may want to discuss here forever but you will stop because of survival needs, eg, food, sleep ,even if you dont value your survival.

>Every man gets constrained in the moment by his beliefs. His beliefs limit him. Beliefs arise from experiences. No man already possesses unlimited experiences. Thus no man has unlimited beliefs.

Even ignoring free will, every new resource is a potential for more wants. Cavemen did not want computers. But then having a computer, one may want app upgrades. Having an app upgrade, one may want more memory or speed.

_At any given time_ is a limit. I may more money and time tomorrow, but now both have a certain limit which limits my obtaining my wants. As those profound economists, The Rolling Stones, sang, “You can’t always get want you want, but if you try, you might just get what you need.” Mick Jagger studied at the London School of Economics. Say no more!

>Since every man has limited beliefs in any moment, every man has limited wants.

In any given moment! But, as Mick sang, “Time is on my side” and “Youre out of time, my baby.” I apologize for this argument from authority.

Smack MacDougal May 5, 2011 at 11:23 am

Resource in the widest sense, as something potentially useful to satisfy wants. And money, a type of buying power, is a resource.

Money is not a resource. Money is mere medium of exchange.

It’s the goods from the products that satisfy wants, which men and women want. Men and women do not want money for the sake of money. They want money to exchange that money for the products that yield the goods (goodies) they seek.

Resources are things that get transmuted into other things as defined into products, which yield goods. As I’ve shown already, and without exhausting the list, resources are trees for timber, soils for crops, and the like.

my time is limited

That bold claim amounts to self-deception. Never do you own time. You cannot possess time. Time moves forward, ceaselessly without out you.

Your survival gets limited. You do not live forever. Your span of survival can get measured from a slice of limitless, infinite time.

every new resource is a potential for more wants.

So you agree with me. Good. For potential is not actual. Actual wants are limited in any moment by beliefs since beliefs derive solely from experience and in moment, anyone only has experiences up to that moment.

Stephen Grossman May 5, 2011 at 12:43 pm

>Money is not a resource. Money is mere medium of exchange.

Money is a resource, derivatively.

>Never do you own time.

1. It can be leased.
2. Tell that to your car mechanic, your doctor’s receptionist and your girl friend when she says she doesnt have a thing to wear. You’ll be buying a set of wrenches, researching medical procedures online and dining alone.

>You do not live forever.

Thus the importance of economizing time.

>Actual wants are limited

Potential wants are virtually unlimited.

Peter Surda May 8, 2011 at 2:37 pm

Smack,

Men and women do not want money for the sake of money.

Well, then printing new money is not going to satisfy their needs anyway.

Smack MacDougal May 5, 2011 at 1:29 pm

Money is a resource, derivatively.

There is money, a medium of exchange and then there are resources.

Some material capitalists (direct speculators) exchange money for lumber, which came from timber, which in turn came from trees, which of course are resources. And the process is the same for all material capitalists with many, varied kinds of material capital that have been derived from resources.

Money is not a resource. Resources spring forth from the earth. Money springs forth from the minds of men and women.

[Time] can be leased. [Never do you own time.] Tell that to your car mechanic

You’re not paying for your mechanic’s time. You are paying for his wit as expressed by his skill. Merely, the mechanic has tried to create an economic quantity — a quantifiable (measurable) unit of his skill, which he averages out to a unit of time, to make easier exchange of money for his expressed wit (skill).

For your mechanic does not possess time and thus cannot sell time. Your mechanic has no document of title or deed of ownership to time. Time is limitless and infinite. Time bests even air, water and sunshine, for all those things shall convert into other things long past the expiration date of mankind.

The same goes for the others you mentioned.

Potential wants are virtually unlimited.

Beliefs come from experiences. Beliefs give rise to wants. No one can derive a want until they have a belief. It’s impossible to gain a want from an missing belief or an as yet-to-be instantiated belief. Thus all have limited wants.

As stated elsewhere, through time, all anyone does is go through a succession of limited wants.

Stephen Grossman May 6, 2011 at 12:29 pm

>all anyone does is go through a succession of limited wants

So your comments have no more rational content than the deterministic twittering of a bird.

Your “economics,” whatever out-of-context truths it randomly has, is a rationalization of the mentality of a brute animal momentarily attracted to random ,concrete events. Just watch the head movements of birds. Thus your respect for “Reason’s” whim-worshipping, pseudo-capitalist Libertarianism. The basically similar Marxist view of man is applied, more consistently, as communism. BTW, the Libertarian development of its underlying hatred of mind is currently applied as a rejection of those political protections of mind called patents and copyrights. This is no coincidence.

Capitalism and economics are the products and needs of man’s volitional/conceptual consciousness. Economics is impossible and unneeded for animals which are limited to perception without man’s volitional/conceptual power of identifying and integrating perceptions. Economics is a need of man’s conceptual/volitional consciousness to systematically learn from the past and systematically plan for the future.

Stephen Grossman May 9, 2011 at 9:19 pm

Vulgar Keysnianism is denounced as if a sophisticated version is true. Does anyone understand this?

Stephen Grossman May 14, 2011 at 2:32 pm

Bala,

Reasoning is the processing (the identification and integration) of perceptions. This includes conceptualization, definition ,induction, generalizaton, deduction. Induction uses concepts to identify causes. Its all guided by logic, the art of the non-contradictory identification of reality.

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