Cafe Hayek: the “art of association”

Quotation of the Day…

by Don Boudreaux on August 24, 2017

in Civil Society, Complexity & Emergence, Myths and Fallacies

… is from page 353 of my GMU Econ colleague Chris Coyne’s excellent 2011 paper “Constitutions and crisis” (typo corrected):

The notion of the “art of association” can be traced back to Tocqueville, who noted America’s robust civil society that consists of an array of social associations and networks.  These associations and networks were not the result of government design or legislation, but instead evolved through the ingenuity of self-reliant citizens acting entrepreneurially.

MD: Yeh … like they didn’t have taverns before then? Sheeeesssssh.

 Associations stand between the government and the market.  They allow people to come together and solve common problems without relying on government.  In doing so, they serve as a check on government power because private individuals do not become overly reliant on government to solve the problems they face.  The emergence of a robust civil society is only possible when people’s right to free association is established and protected.  Where this right exists, people can invest in establishing social associations and networks, which can potentially play a crucial role in the wake of crises.

MD: Put more simply, if the solution to any issues is found to be government, well, you’re still looking for a solution.

DBx: Society is not government.  And while reasonable people can and do disagree over the degree to which government is necessary to a thriving society, indisputably false is the notion that society is created by government and is sustained only by the detailed directions – or, more accurately, detailed diktats – of government.

MD: Government is instituted by money changers. Society is just the fodder … the feedstock … the slaves … the putty in the hands of the money changers and government is what they institute to discipline that fodder. Religion is another form of that discipline.

Unfortunately, the creationist-engineering mindset is dominant in the general public and even more so in the ranks of social scientists.

MD: “Social scientist”:  The ultimate oxymoron.

Even among economists, who are the least likely of all social scientists to fall for the social-creationist myth, the social-creationist myth seems to me to be gaining ground.

MD: Since fully 96% of the worlds population is religious, it’s ridiculous to suppose economists only exist among the remaining 4%.

Were it not so laden with danger, it would be amusing to witness the typical professor who so often, with one breath, sneers at those who deny that the orderly complexity of the natural world is the result of unplanned evolution, and, with the next breath, cheers those who deny that the orderly complexity of the social world is the result of unplanned evolution.

MD: Delusion, oxymoron, myths, religion, self deception … you name it … human beings are the epitome of it all.

Deviant Investor: What Could Upset Markets?

What Could Upset Markets?

Guest Post from Clint Siegner, Money Metals Exchange

Investors have been well-trained in complacency. They have spent the past few years watching markets shrug off momentous geopolitical events – each more quickly than the last. Brexit’s impact faded within days. Trump’s election faded within hours.

MD: Notice how this is focused on “markets?” It’s never focused on traders (like you and me) … it’s focused on the gamblers and the gamers. Geopolitical events have almost no impact on real traders (those actually promising things and delivering). They just impact the highly leveraged gamers … who call themselves capitalists.

Stocks traded at all-time highs this summer and volatility made all-time lows. That is the set-up as we head into the fall…

MD: Stocks are about large collectives. If we had a proper MOE process we would still have stocks. A trader like you and me cannot make a promise to create an automobile company and create money to deliver on that promise. However, as all these companies start very small, a proper MOE process does allow the seed to be planted and grow. The gaming of our corrupt (so-called capitalist) system makes it difficult for small companies to compete with corporations.

Almost nobody seems nervous. In this age of central planning and highly artificial markets, it is hard to tell when this period of strange market serenity will end. But vigilant investors should have a few ideas. The next few months are going to challenge the status quo.

MD: The central planning and artificial markets are enabled by our “improper” MOE process. They are enabled by the nonsense they call capitalism. Capitalism is easily defined as “two years with a large dose of elite privilege”.

President Trump Is Under Siege

MD: And should be. He is just one of “them.” He has still not mentioned WTC7. But he is not being called on it. He is “not” under siege in reality.

It has been clear from the beginning of his term that President Donald Trump has very few supporters in Washington DC.

MD: Nonsense. This is all provably theater … like the Harlem Globe Trotters and the Washington Generals.

Democrats and progressives naturally oppose him. Deep staters have been working hard to undermine the administration. And you don’t need enemies when you have “friends” like John McCain, Mitch McConnell and Paul Ryan in the Republican led Congress.

MD: But one thing you can say about all the combatants you enumerate: NONE have mentioned WTC7.

Turmoil in Trump’s administration escalated last week. The president disbanded two separate business councils following the defection of high profile CEOs who disagreed with Trump’s response to events in Charlottesville, Virginia.

MD: And look at Erdogen in Turkey. This kind of turmoil enables these actors to reinvent themselves on a whole different stage. It’s all false flags. Israel is the master of this deception.

On Friday, Americans learned Steve Bannon, Trump’s Chief Strategist, was kicked out of the White House. That will cost Trump some support from his core constituency, who favored Bannon.

MD: As 15,000 newly minted morons (i.e. those disgusted with what they think are Trump’s opponents) show up to support him in Arizona. It’s “all” theater!

The president is already taking flack from supporters such as Ann Coulter. Bannon’s ouster leaves the President with an inner circle which is completely dominated by Wall Street insiders (with a history of supporting Democrats – such as Gary Cohn, Steve Mnuchin, and Dina Powell) and Pentagon brass.

MD: And Ann Coulter is a religious nutcase … who is occasionally right about things. I will guarantee you … she doesn’t know what money is.

Should a good portion of Trump’s voters stop backing the president, he’ll be in real trouble. And markets will start pricing that in.

MD: Oh really? He’s in there for four years. He can do enormous damage to us and benefit them  (i.e. rearrange things for the occupiers of our country). Look at George W. Bush. A third grader would have made a better top administrator … and he got two terms. What’s surprising is his dad only got one term. They really don’t like the disruption caused when they change their current “Meadowlark Lemon”.

Conflict with North Korea Possible, Even Likely

MD: Right. If that’s what they choose. They got it in Afghanistan, and poppies were their only interest there. If they can take out Qaddafi and Hussein (who they put in), they can take out Kim.

North Korean dictator Kim Jong-un ramped up the rhetoric again late last week in response to planned military drills conducted by South Korea and the U.S. Should the North Koreans test fire another missile, the U.S. may well respond with force.

MD: What’s theater without a crescendo occasionally? You have to create the emotion to hold the audience.

The generals advising the President appear to be succeeding in the effort to persuade him to get more aggressive. Steve Bannon’s departure signals that Trump has heard enough counsel for a less interventionist foreign policy.

The former Chief Strategist was one of few voices for restraint in the White House.

Bannon’s views with regards to North Korea in particular seem to be part of what put him at odds with the president. In an interview with the American Prospect, released just days before his ouster, Bannon said;

“There’s no military solution here; they got us. Until somebody solves the part of the equation that shows me that 10 million people in Seoul don’t die in the first 30 minutes from conventional weapons, I don’t know what you’re talking about.”

MD: Bannon may not have been on the full inside track yet. We will find that “Kim” is one of “them” too … or can be taken out with ease.

In recent days, fears over a confrontation with North Korea have seeped into the markets. If actual warfare breaks out, investors can expect a much bigger reaction.

MD: There has not been a single war in my lifetime that was a “real” fight among people. They were all just theater with “them” moving “us” (the pawns … the cannon fodder) about the board. In the end, it was “them”, not “us” who won the spoils … regardless of the side you’re looking at. And we’ve been at war with someone my entire 70+ year life … and actually all the way back to Knox who got his standing army within six months of the formation of this ridiculous union.

Republican Leaders Angle for Debt Ceiling Increase

MD: Governments (all of them) are sustained totally by counterfeiting. They make trading promises … and then roll them over when they don’t deliver. That’s default. Not mitigated immediately by interest collections, that’s counterfeiting … that results in inflation.

The money changers collect tribute on that debt (which is just money created by a deadbeat trader … not loans from money changers) … and all that tribute (they call it interest) comes from taxes. They have to keep track of the counterfeiting number so they can tell us what our tribute needs to be. Otherwise, if you’re just counterfeiting, why keep track of how much counterfeiting you’ve done?

The Republican leadership in Washington DC wants to increase the borrowing limit, quietly and without fanfare. However, they may not be able to betray rank and file Republican voters and get away with it this time.

MD: Dreamer. They always get their minimum wage increases. They always get their debt ceiling increases. They always get their wars. They even always get their government shutdowns rolled back and no government worker loses anything … ever … unless they blow the whistle … then they lose everything.

Conservatives in Congress look ready to revolt, leaving leadership in the awkward position of having to seek compromise with Democrats.

MD: Oh please. Someone introduce this moron to Abe Saperstein!

The problem is that Democrats are looking for any chance to thwart Trump and Republicans.

It’s unlikely we’ll see a fight over the debt ceiling which is big enough, and protracted enough, to have significant implications for markets. Past battles over the debt ceiling have been for show. In the end, Congress has never missed an opportunity to hike the borrowing limit – big government Republicans and big government Democrats always find common ground.

MD: The fact that they can just continually increase the debt ceiling is proof, that tactic (which somehow got by “them”) has been neutered. Iterative secession. This thing is broken beyond repair.

However, the polarization in Washington DC is unprecedented. It might even lead to a genuine stalemate this time around.

MD: “Unprecedented” is a grossly overused word. When it comes to Washington DC nothing is unprecedented. Over the nearly 300 years time they’ve been fleecing us, they have tried everything … several times over.

Wildcard: Russia Hacking Story May Implode on Democrats & Fake News Media

 

Democratic leadership and their friends in media bet the farm on convincing Americans that Trump colluded with Vladamir Putin to subvert last Fall’s presidential election. They have been telling the world that Putin stole damaging, confidential party emails and coordinated with the Trump campaign to release them at the most opportune time – just before the people voted in November.

MD: The theme continues. Does Siegner really believe there are different forces competing here. I’ll cease comments on this fake competition for the rest of the article. Siegner is clueless about the tactic it seems.

Wikileaks founder Julian Assange says he can demonstrate unequivocally that the Russians are not the source of the leaked information. Last week, Republican Congressman Dana Rohrabacher met with Assange to discuss the matter and agreed to share the details with President Trump.

Investors should get ready for some significant developments to be announced soon.

MD: They’re already ready … those really inside elites  anyway Remember, they’re driving this bus. They’re chomping at the bit for the windfall they are about to create.

It will be bad news for the Democrat Party and its legacy media allies if their Russia narrative falls apart. Particularly if it turns out whistle blowers from inside the Democratic National Committee were the source of the embarrassing leaks. Party leaders do not want Americans to turn their focus to scandals such as the DNC’s effort to undermine Bernie Sanders or CNN feeding debate questions to Hillary Clinton.

If, as some on the right have speculated, the murder of Seth Rich is related to the leaks it could turn the political left upside down. That would shake Wall Street as well as Washington DC.

Clint Siegner is a Director at Money Metals Exchange, the national precious metals company named 2015 “Dealer of the Year” in the United States by an independent global ratings group. A graduate of Linfield College in Oregon, Siegner puts his experience in business management along with his passion for personal liberty, limited government, and honest money into the development of Money Metals’ brand and reach. This includes writing extensively on the bullion markets and their intersection with policy and world affairs.

Cafe Hayek: Varieties of “Anti-Government”

Varieties of “Anti-Government”

by Don Boudreaux on August 22, 2017

in Philosophy of Freedom

Prompted by the recent violence in Charlottesville, in my latest column in the Pittsburgh Tribune-Review I highlight some differences that ought to be kept in mind when using, or encountering, the term “anti-government.

MD: Right away it gets scary. He is getting his thinking published. He is part of the “propaganda” arm of government. I think he writes about government’s use of “force”. Propaganda is government’s go-to tool. It only resorts to force when the polls show the effectiveness of the propaganda is not sufficient. By my poll (only 17 out of 298 people I’ve personally polled know anything about WTC7 falling down), the propaganda … and suppression of information … is working just splendidly.

A slice:

A libertarian’s – a Jeffersonian’s – “anti-government” stance reflects mainly a strong presumption against using force to direct peaceful people’s affairs.

MD: Why not leave people to direct their own affairs? Why is a government solution to issues (which always proves to be the least effective choice) always proposed first to the exclusion of all others? In my space it wouldn’t be that way. Iterative secession.

The libertarian objects first and foremost not to particular policies of a large and constitutionally unconstrained government, but to its very existence.

MD: Two issues: What does “constitutionally constrained” mean when that document is blatantly flawed … note it has no buy/sell agreement? What is “government” when it is openly occupied by our enemies … witness the mysterious collapse of WTC7? And an issue probably not covered herein: why is any level of government involved in directing anything that the level above it can deal with … the individual being at the top. Virtually 100% of what every level of government deals with today can be handled at the level just above it.

Even if such a government were today to behave in no ways that the libertarian finds objectionable, he remains opposed to it, understanding that such power is destined to be abused.

MD: So he’s saying libertarians are opposed to the camel getting his head under the tent. I wonder if he gets into why the camels want into the tent in the first place. And whose camel is it?

Of course, the libertarian is indeed “anti” many specific government policies – tariffs, subsidies, minimum wages, occupational licensing, K-12 schools’ funding and operations. This “anti-government” stance reflects no prejudice against an ethnic group, no favoritism for a culture or way of life. It reflects prejudice only against using power to secure special privileges, favoritism only for maximum scope to live, work and play as individuals peacefully choose. It is, in short, a pro-individual-liberty policy.

MD: So if governments didn’t use power to do these things, libertarians would be ok with it? If you’re pro-individual-liberty, why is there any government at all? Why isn’t everyone “pro-individual-liberty”? And why must those of us who are have to be in the same space with those who think there is a place for government. Read the Federalist Papers and at the same time read the Anti-Federalist papers.

The founding children surmised that if the states were left as separate entities their differences would result in fighting and wars. So their solution was to force them into the same space instead of letting them have their separate spaces in which to go about their separate ways. Now really? What kind of thinking is that???

Iterative secession. We took the wrong fork in the road when we formed the union. We must go back and try the other fork. This one has proven itself not to work … and globalization initiatives are proving the problem to be chronic.

Cafe Hayek: No Monopsony in the Market for Low-Skilled Labor

MD: All economists confuse the “proper” Medium of Exchange” process with some kind of manipulation of the economy.  That’s just what they think their job is … their focus is … their expertise is … their destiny is. And they are all flat out wrong.

Money simply enables traders to effect their trading promises over time and space. Trading “is” the economy and trading over time and space is a huge part of trading (simple barter exchange in the here-and-now being the rest … unless you consider government counterfeiting) … and it is the only instance where money is created. Money is just the record of these in-process trading promises. It doesn’t exist before the promise nor after delivery for any instance of a trading promise spanning time and space. Thus, it cannot and will not inflate or deflate. And it is always in free supply. No economist needed!

If a trader (and we are all traders … with different levels of responsible behavior) can see clear to delivering on a promise over time and space, he does so of his own volition. He is free to create money to carry out his promise. If he fails (defaults), the orphaned money is reclaimed immediately by an interest collection of like amount.

Manipulation of the money process is “always” counterproductive. It should never be allowed … and with a “proper” MOE process, it cannot be accommodated … so “is” never allowed. Let’s see what kind of manipulation is being studied in this instance.

The article:

My Mercatus Center colleague Jayme Lemke (who earned her PhD in economics from George Mason University) published last year in the journal Public Choice a very nice piece of research titled “Interjurisdictional competition and the Married Women’s Property Acts.”  (This article won the 2017 Gordon Tullock Prize.)

MD: Georg Mason University is a “hotbed” for Mises Monkery. It is kind of the USA abby for the religion.

In this article, Jayme explains the timing during the 19th century of U.S. states modernizing their property law – specifically, modernizing this law to enable married women to own, use, and alienate property no differently than could men and unmarried women.  This timing, Jayme shows, is explained by the intensity with which state leaders wished to increase their states’ populations.  A state whose leaders could personally enjoy some significant gains if that state’s population increased was more likely to modernize its property law than a state whose leaders stood to gain less from a population increase.  (My summary here of Jayme’s thesis and of her principal finding do not do justice to her paper.  Do read it yourself.  It’s excellent.)

MD: The state (and the money changers that institute it) are notorious for co-opting the trading process … for their own self interest. In trading there is no gender. It is human specific in the animal kingdom, but other than that, all traders are equal (until the money changers … and the states … and the leaders they institute dictate otherwise).

One of the passages in Jayme’s paper that I found to be especially interesting and germane is the following on pages 302-303:

“[O]ne of the practices first implemented by [Massachusetts textile-mill owner Francis Cabot] Lowell and later copied by other industrialists was the active recruitment of young women.  Lowell would pay recruiters to go out into the rural areas of Massachusetts, New Hampshire, and Vermont to find female workers….  The model developed by Lowell came to be copied by aspiring industrialists across the Northeast, and beyond.”

MD: And if he could have recruited dogs or pigs or horses to be productive in his mills he would have done that. When you need to expand your labor force, you pull out all the stops. When you have the luxury of picking and choosing your labor force, you impose all the stops you think are appropriate. And it seems to be a male/female thing. Women creating enterprises have a tendency to employ women over men. And it is a race thing. Proprietors from India operating convenience stores seem to exclusively use Indians to run their stores. This isn’t rocket science. It’s about ease and predictability of control.

More than 150 years ago – when transportation and communication were primitive by the standards of the early 21st century – competition nevertheless drove industrialists to spend significant resources to recruit, from distant places, low-skilled workers.  If profit-hungry industrialists went to such lengths in mid-19th-century America to locate and hire workers from jobs (then, mostly on farms) that paid those workers less than they could earn working for the recruiting industrialists, what sound reason is there to suppose that employers of low-skilled workers in America today generally possess anything that can, without laughing, be called “monopsony power” of such workers?  Answer: none.

MD: But that’s only half the story. Those workers left the farms because the industrialists offered them a better life than they had on the farm. But most of the industrial managers didn’t have to be scrupulous … so they were not scrupulous. Once they had control of those transplanted workers, they took advantage of them … because they could. That just seems to be human nature. The farmers did the same thing with their hired hands (in some cases making them total slaves).

Those who assert the existence of such monopsony power do so either because they mistakenly believe that such power exists whenever any employer faces a supply of labor that is less than perfectly elastic (that is, whenever an employer would quickly lose all of his workers of a given sort if that employer cut the pay of those workers by as little as one cent per hour), or because they ignore the active efforts of employers to find and recruit low-skilled workers.

MD: Well duh! That’s called a mature market. The grocery business has been running on razor thin margins for decades … as has the oil business.

Low-skilled worker Jones currently in job X need not himself have much gumption or stomach for actively searching out new and better employment if employers offering better-paying jobs Y and Z take steps actively to recruit Jones and other such workers.  And employers have every incentive to do such recruiting if and when there are pools of workers who are currently paid less than the value of those workers’ marginal products were those workers instead employed by the recruiting employers.

MD: When it comes to workers … and also to money, the HUL (Hour of Unskilled Labor) becomes the proper unit of measure. It never changes over time and space. It always trades for the same size hole in the ground.

And when it comes to labor, that’s as low as the scale goes … it doesn’t really ever become less than unskilled (unless you consider the case where they hire the handicapped … and supplement their lower than unskilled worth with government subsidies). Once you reach the HUL lower limit (or force it with something like a minimum wage adjustment), you move into the realm of the robot. Automation removes the need for human labor in that task altogether.

Economists seem to want to turn that which is natural into something they can manipulate … to make it rocket science. Interestingly, economists, like artists (excepting a tiny number of rock stars) work outside the domain of supply and demand. They cannot command the prices they charge for their services without government and corporate subsidies. They just aren’t needed in society. Unfortunately, when they are engaged, they become complete counterproductive and manipulative pests. They are all pulling in different directions at the same time … with greater and greater diligence and noise. Show any science that is pulling in all possible different directions as is the claimed science of economics … and politics for that matter. They are not science.

Deviant Investor: Total Eclipse of Sense

The Deviant Investor

A Non-Traditional Perspective

MD: Hmmm. “A Non-Traditional Perspective” … this from the guy who will not let my posts pass his moderation … because they are “unorthodox”. Go figure.

My creation of this website and blog at least partially resulted from his (and other goldbugs and Mises Monks) defensive maneuvers.

Let’s see what pearls of wisdom his non-traditional perspective brings us. We certainly won’t expect to be disappointed when he links his wisdom to an event that is mathematically predictable over the whole span of time we have had the math … and into the foreseeable future.

Total Eclipse of Sense

The eclipse of the sun occurs today. The silver moon covers the golden sun, plunging a small portion of the United States into darkness for a few minutes. Perhaps it is time to do a sanity check.

Investors Business Daily: “U.S. Has 3.5 Million More Registered Voters Than Live Adults

We blame the Russians but the election fraudsters are us.

Blame the Russians!

Zero Hedge: “Only in California…

“According to a statement from Western United Dairymen CEO, Anja Raudabaugh, California’s Air Resources Board wants to regulate animal methane emissions even though it admits there is no known method for achieving the type of reduction sought by SB 1383.”

(Legislation to regulate cow and sheep flatulence – how charming!)

MD: We need to regulate those people’s exhaling. After all, it is CO2 … that deadly greenhouse gas. It can be done by inhibiting their inhaling. Enter SB 1383A stage left.

A new proposal: SB-219 blasts a deeper hole into common sense regarding the use of pronouns, gender choice, gender identity, bathrooms, transgender and more. What will be considered “normal” in five years on the left coast?

MD: Hopefully it will be sovereignty. But that’s much too much to even dream for.

Now in California! Perhaps coming to your state soon?

MD: If we’re talking about secession, I sure hope so.

Thanks to the Federal Reserve policies, commercial fractional reserve banking and U.S. government spending, prices have risen for decades.

MD: Fractional reserve banking hasn’t cause that. That’s just enabled the money changers to leverage their self given privilege by 10x … making them become capitalists in just two years and allowing them to then take “their” money off the table … and in 30 years, multiply what they let ride by 12,000 times. No … the price changes caused by the unbalance between supply and demand for the money itself comes straight from the government … their continual rollovers which are defaults not met by interest collections of like amount. It’s called counterfeiting. All the taxes go to the money changers in the form of tribute (interest) they demand … for doing absolutely nothing! But then, they instituted the government didn’t they. What should we expect?

However we are assured there is almost no consumer price inflation.

MD: There can’t be if you’re going to have COLA’s in your pension formulas. That’s suicide when you can’t stop the counterfeiting. The only thing you can resort to is the “thumb on the scale” trick .. and that’s exactly what they’re doing. Based on my SS check year over year, inflation has been 0.27%. Based on the cost of my rib eye steaks, it’s been about 27%.

One of the mandates of the Fed is “stable prices.” Hmmmm!

MD: And of course we here at MD know that  a “proper” MOE process employees cares nothing about prices, employment, balance of trade, or anything else. It has no monetary policy. It has no reserves. It functions just like the over-speed governor on your lawnmower … through negative feedback correction (mitigated defaults immediately with interest collections of like amount). It is totally objective and can’t be manipulated at all.

Socialism:

Global warming: Do you think the politicians would have supported the global warming story if they could not tax greenhouse gases? The worry in the 1970s was global cooling. That story died because there is no way to tax the global cooling story or make a profit from it.

MD: No. That’s also why marijuana will soon become the national flower.

 

****************************************

 

The reality that is worth understanding:

Time for a sanity check. Gold or paper? Results or promises? Face reality or blame Russia?

Gary Christenson

MD: Actually, a pretty good effort this time by the clueless Gary Christenson.

Cafe Hayek: Assumptions of Right

Quotation of the Day…

by Don Boudreaux on August 21, 2017

… is from page 359 of the late Paul Heyne‘s insightful 1981 article “Measures of Wealth and Assumptions of Right: An Inquiry” as it is reprinted in the 2008 collection of Heyne’s writings, “Are Economists Basically Immoral?” and Other Essays on Economics, Ethics, and Religion (Geoffrey Brennan and A.M.C. Waterman, eds.) (footnote deleted):

MD: Notice how the Mises Monks never just cite an article and not its author. As in this case, there is always hyperbole … e.g. Paul Hayne’s “insightful” article. This is a Mises Monk marker.

 

Marxists have long complained that conventional economic analysis takes for granted the existing system of property rights.  The charge is fundamentally correct.

MD: Let’s see if he exposes the alternative to this? Hint: No he doesn’t.

Am I likely to paint a house that isn’t mine? Am I likely to build a house on property that isn’t mine?

 

Offers to supply goods and efforts to purchase goods always depend upon people’s expectations of what they can and may do under specific contemplated circumstances.  What a person may do expresses, in the broadest sense, that person’s property rights.

MD: Remember … a right is a defended claim. Here we have an implicit claim and no defense suggested. Do we really think we have a right being talked about here?

In order to predict, explain, or even talk intelligibly about those patterns and instances of social interaction that we call “the economy,” we must begin with people’s expectations, that is, their property rights.

MD: Why do they see the economy as a “social” interaction? If everything was an automat, would it still be a social economy? An economy is about trade. There is nothing social about trade in most cases. The purpose of advertising is to socialize it … but that’s not an attribute … it’s just a tactic

 

DBx: To avoid possible misunderstanding, I would have slightly reworded the final sentence of this quotation to read: “In order to predict, explain, or even talk intelligibly about those patterns and instances of social interaction that we call “the economy,” we must begin with people’s legitimate expectations – namely, those expectations that are widely shared and agreed to throughout the community – that is, their property rights.”

MD: Ah … now you talk about a great Misesian improvement. Add more words and say even less.

Heyne’s point is profound and important.  Obviously, we cannot possibly distinguish illegitimate coercion against others from the legitimate exercise or defense of one’s rights until we know in sufficient detail the property-rights arrangement.

MD: Which will be found in a spaghetti of conflicting laws, rather than a simple statement of principle … like the golden rule.

If I break the window of a house at 123 Elm St. and then enter, you cannot know from this physical act if I am burgling the house (and hence, violating someone’s property right) or entering the house with the permission of the homeowner (namely, in this example, myself who locked myself out of this house that I own).

What is less obvious, but no less important, is the fact that property rights boil down to shared expectations.

MD: And of course “principles” are shared expectations. Laws are not.

In modern America (as in most modern societies) ownership of a house includes the widely shared expectation that in all but extreme circumstances – for example, when the house is engulfed in fire – the right to decide who may enter the house is reserved to the homeowner.  Ultimately, this right rests on widely shared expectations.  If I, a modern American, move to some community in which the widely shared expectation is that anyone who wishes may enter unannounced into any house in that community, with or without the permission of the owner or occupants, and by whatever means, then no right of mine is violated if some stranger breaks into my house.

MD: And can we picture any collection of people who would see this behavior as adhering to the golden rule? Actually we can. Most utopian societal communal failures see things this way.

Expectations, being what they are, can be affected by the formal legal and legislative codes, but expectations can also diverge from these codes.

MD: Which makes those codes pretty worthless, doesn’t it … especially when we get 40,000+ new ones every year.

(An example of such a divergence is the fact that in some U.S. states – I think, for instance, in Massachusetts – it remains an ‘on-the-books’ criminal offense for two adults who aren’t married to each other to have consensual sex with each other.  Yet community expectations now no longer regard such activities to be unlawful.)  Expectations change more frequently (especially in open societies) than does the formal law and the legislative codes, and expectations are always more nuanced and ‘granular’ than articulated legal rules or legislative commands can possibly be.

MD: But if were about principles rather than laws, the golden rule principle would easily address this … i.e. it’s only the business of the two people involved.

At bottom, a society’s laws are its widely shared expectations about how individuals may and may not act toward each others’ persons and toward the material things, as well as the symbols and markers, that individuals possess and use as they conduct their affairs both individually and in groups.

MD: A misstatement. Its principles, not its laws, are the widely shared expectations. Its laws are a hopelessly flawed attempt to nail down the jello which is those principles. As I’ve stated before, it would take an unlimited number of laws to nail down the principle of the golden rule.

(By the way, do watch the 1997 movie, The Castle.)

Cafe Hayek: Political scope?

MD: Anyone who has read Ludwig von Mises has found him to just largely be a double talker. He goes on and on and on bouncing off the walls, losing sight of his subject, and just rambling. And when he does assert something, it makes no sense at all. It’s like a fractel … or pealing an onion. You can keep dissecting it, but as you do you just keep seeing the same thing … and if your fortunate it ends like an onion pealing exercise … with nothing. If you’re not fortunate it goes on without end … and becomes the Mises Monks’ religion

This is particularly evident when his subject is (or is thought to be) money. He goes into all kinds of nonsense about prices and what motivates people to trade … and then to trade again (the margins). And none of it has anything to do with money … what it is … why it is … and how it is.

As I read this “comment of the day” I’m left with the same feeling … but this time the subject is politics … whatever that is.  What do you think?

by Don Boudreaux on August 20, 2017

 

… is from page 75 of my late Nobel laureate colleague James Buchanan’s 1986 paper “Notes on Politics as Process,” as this paper is reprinted in James M. Buchanan, Politics as Public Choice (2000), which is volume 13 of the Collected Works of James M. Buchanan:

Politics that is confined to a few and well-defined tasks cannot be seriously predatory.

The American founders seemed to recognize this simple truth.  Modern political scholars do not.

MD: I read it over and over and over … and it says nothing … absolutely nothing! Maybe we need more context. In the case of Mises, we never do. More context never helps.

Cafe Hayek: Jeff Miron on Statues

MD: We here at Money Delusions have strong opinions on government (it is an admission of failure of principles and cooperation). The responsibility for a thing called Monetary Policy is immediately claimed by governments once they are instituted by the money changers to have just that power … to manipulate money and thus control trade … to enable their farming operation which they call the “business cycle”.

As a tactic, governments have on-going propaganda campaigns. They are like religions in that respect. They just last as long as religions … and are more numerous. Part of that propaganda campaign is to elevate their operatives to super-human status. This is almost always done posthumously.  And we see the technique on a daily basis at Cafe Hayek as these Mises Monks try to protect the sainthood of their operatives.  Boudreaux is in the process currently of securing sainthood for an operative named Jim Baldwin (whose confusions Boudreaux shares and wants to have immortalized).

Let’s review this article to see if they can see the delusions involved … and what the principle should be.

Jeff Miron on Statues

by Don Boudreaux on August 19, 2017

in Current Affairs

I post in full – and I agree in full:

Why should a city, state, or federal government put statues in public parks?

MD: Consider the principle of “all” government. Government is the last resort for dealing with issues that no level of cooperation above it can deal with itself … at the top being the individual. Government is stark evidence of cooperation’s failure to deal with the issue … i.e. problem still looking for a proper solution.

Take something as simple as recording of deeds and other legal documents. This is the role of the county clerk. With their green eye shades they maintain the books of indexes into boxes on top of boxes full of contract documents retained for public inspection. It is the process they have for facilitating  “transparency” to protect claims. The principle here is that if everyone can see the claim at any time … and for all time, then that in and of itself with defend the claim. And this is largely true. Unfortunately government has been an inept way of addressing this need. Countless such records have predictably been destroyed with the inevitable fire and water destruction of courthouses.

The government solution has failed from the get-go. In the particular case of “real property”, a private solution is found in the invention of “title insurance”. Here, a private industry has relegated the role of the county clerk as the first step (a public step) in a private process (title company real property record search). And in that process, the “transparency” principle is not even obtained. The title company’s records are not open to the public. It’s not a very cooperative solution is it!

When you see a government solution addressing any issue, you know implicitly that the issue is still not being addressed properly. On inspection you will find that “all” government involvement can be eliminated by resorting to principles rather than laws. Laws are just an attempt to nail down the jello of misunderstood issues that are easily handled with principles and transparency … the most obvious one being the golden rule. As a thought experiment, think of the number of laws you need to nail down the principle of the golden rule. Hint: Infinite … and with 40,000+ new laws every year, they are crowding that the estimate … and that is a trait of all valid principles … the number of laws required to nail them down approaches infinity.

So back to the question: “Why should a city, state, or federal government put statues in public parks? “.

What’s the principle? First comes “what is it a statue of?”. If it’s of a duck or an elk, it’s no big deal. But in most cases it is of a person. And the purpose of that statue is for the memory of that person to live after their death. And it almost never works. In less than a generation, the significance of the person depicted in the statue is forgotten totally … all that is left, as a crutch, is the plaque.

The “real” purpose is give credibility to the people who share that person’s belief. It is to get people working for (or members of the same club as)  the statue builder to think that if they behave, work for less than they’re worth, exhibit blind loyalty, etc., they too will be immortalized in marble or bronze. It is an attempt by the organization building the statue to gain “stature” for that organization. It’s just that simple. It’s a tactic.

Most statues are of government workers. Most government buildings are named after government workers. Many streets are named after government workers. And who are the least capable workers among us … and make the biggest messes of the biggest things? Right … government workers. So go figure.

Doing so addresses no plausible market failure, while using taxpayers funds and, as demonstrated tragically over the past few weeks, generates controversy, polarization, and violence. Thus governments should take down all statues, regardless of their political implications.

MD:  First, most of these statues are not constructed with taxpayers funds. But they are placed on “so-called” public property. Now that we know the principle involved … giving recognition to one to garner loyalty and discipline of many, we see that the statues should never have gone up as a public symbol at all … and they are just one form of recognition and sainthood that is unprincipled … it is a tactic of a faction.

But taking them down makes a larger public statement than the statues themselves. That statement is that in an instant of time, one cooperative collection of people can disassemble what another cooperative collection of people constructed years, decades, even centuries before. For sure, they shouldn’t be able to do that more capriciously than the original initiative was done.

And what do you do when the statue was constructed privately on private property and then given over to the public? A principle should be adopted going forward that self recognition has no place in government and should not be tolerated moving forward. Of course, not tolerating government at all going forward nips that issue in the bud doesn’t it.

This is not “erasing” history but instead leaving it where it belongs, in the hands of private actors and mechanisms.

MD: Putting up statues is the first step in “distorting” history. It is a tactic … just like writing a biography … or worse, an auto-biography. The principle is that such self-aggrandizement requires no public support and should not get public support.

Historians, textbook authors, universities, learned societies, the History Channel, and many other individuals and organizations can all present their own views of history and battle for the hearts and minds of the public.

MD: All those sources just enumerated are instances of “historic revision”. It is an expected principle and by the golden rule should not be inhibited … but it should not be publicly purveyed either! In most cases it is a symbol of one government prevailing over another government … when neither government should have been allowed to exist in the first place.

Government statues are government putting its thumb on the scale, which is one step down the slippery slope of thought control.

MD: It is a tactic … and one that should be eschewed … as should be government. Look for another solution when government is proposed to deal with a cooperative issue. Such proposals should be viewed as “dead on arrival”

Brilliant, and wise.

MD: Obvious!

Cafe Hayek: in Economics, Politics, Seen and Unseen

MD: Here at MD we are aware of far more delusions that cripple society than just the money delusion. Some are related. Some are not. Other delusions are about democracy … and about the rule of law. In commenting here, I think I’m going to be getting into delusions about law. Let’s see.

by Don Boudreaux on August 17, 2017

in Economics, Politics, Seen and Unseen

… is from page 110 of my late Nobel laureate colleague Jim Buchanan‘s 1980 paper “Rent Seeking and Profit Seeking,” as it is reprinted in volume 1 of The Collected Works of James M. Buchanan: The Logical Foundations of Constitutional Liberty:

MD: Laws just plain don’t work … witness the 40,000+ new ones we get every single year. Further, take a gander at how those laws are made. To further show the falacy of laws, consider how many you must write just to embrace the simple “principle” of the golden rule. Hint: There are fewer grains of sand on all the worlds beaches. When we deal with things in a societal manner, we should deal in principles and not laws. And we shouldn’t bring things to a societal forum that can be handled in a more constrained forum. The individual is the ideal forum for addressing issues … most can be dealt with right there when you are guided by principles …. not laws.

But economists have concentrated far too much attention on efficiency and far too little on the political role of markets.

MD: Any discovery of political role reveals a flawed process. Politics has no place in trading … no place in economics. All issues in trading and economics are easily handled by the traders involved … and adherence to principles … starting with the golden rule. When you tolerate cheating, you’re going to be dealing with lots of cheating. When you classify cheating as gamesmanship you are deluding yourself.

To the extent that markets are allowed to allocated resources among uses, political allocation is not required.

MD: Bingo … even without the “allowed” qualification.

Markets minimize resort to politics.  Once markets are not allowed to work, however, or once they are interfered with in their allocative functioning, politics must enter.  And political allocation, like market allocation, involves profit seeking as a dynamic activating force.

MD: I’m perplexed how we can be in violent agreement here … and how Cafe Hayek can be so clueless about trade, traders, and money.

DBx: Many opponents of markets find the open quest for profits in market economies to be unethical or unaesthetic, and they blame markets.

MD: There is no substitute for “markets”. To attempt a substitute is just to impose another market … i.e. another playing field … with a set of rules that favors one set of traders over another. Let the traders be free to choose their own playing field … and others who claim they should not be allowed to do that can just go pound sand.

What these opponents miss is the fact that the self-interest that is typically – and even the greed that is sometimes – on display in markets is not created by commercial markets.

MD: Self interest is personal and totally natural. Anyone who claims they are not first in every question of pecking order is deluding themselves. Greed, in the final analysis, is a person’s confusion about what their self interest really is. In the end it accomplishes a goal they don’t want to attain. There is very little of use in the bible … but at least they  there tell of a guy named Ecclesiastes as “getting this concept” … in the end

Commercial markets are merely a forum in which individuals act on these motivations.

MD: Why the “commercial” qualification?

One of most profound errors committed by market opponents is to suppose that when activities are transferred from commercial markets into the realm of politics human imperfections and self-interest are replaced by superhuman perfection and altruism.

MD: Pretty peculiar isn’t it, when you stand back and observe “all” politics is sub-human, not close to perfection, and arises out of advanced selfishness … in violation of the golden rule for those practicing and imposing it. In fact, they openly oppose and refuse to comply with their own rules and those they impose on others.

But as Buchanan argues, it’s naive to suppose that the mere shifting of activities from one resource-allocation forum to another changes the underlying human motivations.  (And such shifting certainly does not change the underlying human cognitive limitations.)

MD: It changes the playing field. That’s it. But worse, it disallows others from leaving the field … just taking their ball and going home. The USA Constitution does not have the “obligatory” buy/sell agreement. You “will not” secede.

So profit seeking occurs in political settings no less than in market settings.  But the kinds of information and constraints in political settings differ greatly from those in market settings.

MD: Remember, democracy only works with less than 50 people involved. And the political setting being addressed in the case of the USA has 500,000 involved … in the “most representative” case. Ridiculous! We are tolerating a process that was DOA … and the writers of the Anti-Federalist Papers were totally aware of it. But the money changers, as always, prevailed. They’re the ones who called the meeting in the first place.

Therefore, the kinds of actions taken in one setting, and the consequences of those actions, differ from the actions and consequences in the other setting.

MD: That’s not a “therefore” qualification. You see those differences and consequences between just two traders on the same playing field negotiating the same issues … just at a different point in time. That’s called trading. It has, at most, three steps: (1) Negotiation; (2) Promise to Deliver; (3) Delivery. In many cases it doesn’t pass the first step. In the case of simple barter exchange in the here and now, steps (2) and (3) happen simultaneously on the spot. Under political influences, step (3) happens under manipulated time and space and step (2) never is used at all! It is just lied about.

One important difference is that in markets, profits are earned only through voluntary payments while in politics profits are typically extracted by forcibly transferring property from the politically weak to the politically strong.  The fact that such transfers are not overtly called “profit seeking” – and the fact that political activities are camouflaged with public-interest rhetoric – doesn’t change the underlying reality.

MD: But it’s worse. The money changers control the “improper” MOE process we all use. That is really where the problems begin and end. Allowing a “proper” MOE process to compete makes all these issues go away. There is “no political economy” in such a case.

In summary, in the market Smith profits only by building a better mousetrap or by devising a process that reduces the amount of resources used to build a familiar mousetrap.

MD: Wrong. The process allows one trader to convince another that that is the case. More trades take place under delusions than under rational choice. If that wasn’t the case, advertising would be very much different.

(Smith might do so directly, as a mousetrap producer, or indirectly, as someone who secures the financing for a mousetrap producer.)

MD: With a “proper” MOE process, the “financing” qualification is totally unnecessary. Any responsible trader can make a promise spanning time and space and create the money to carry it out in the domain of a “proper” MOE process. Deadbeat traders can too, but the more irresponsible they prove to be, the more interest load they must bear in reclaiming the defaults the make. At the limit, they preclude “themselves” from money creation privileges in the domain. They can use all the money they want … anonymously. They just can’t effectively  create it. What they create immediately is taken back by interest collections. There is nothing left to do anything with.

In politics, Jones typically profits by confiscating mousetraps from Smith or from Smith’s customers, or by confiscating the inputs that Smith would otherwise use to make mousetraps.

MD: This also happens in normal trade without politics. If Jones can manipulate Smith’s perception in the (1) Negotiation phase, Smith is putty in Jones’ hands. And if you don’t allow the (1) Negotiation phase, you have different issues entirely. Don’t make this more complicated than it needs to be.

Cafe Hayek: In Economics, Virginia Political Economy

Quotation of the Day…

by Don Boudreaux on August 16, 2017

in Economics, Virginia Political Economy

… is from pages 48-49 of my late Nobel-laureate colleague Jim Buchanan’s 1996 paper “Economics as a Public Science,” as this paper is reprinted in Economic Inquiry and Its Logic (2000), which is volume 12 of the Collected Works of James M. Buchanan (footnote deleted):

MB: Again, I call attentions to all Mises Monks trait of genuflecting to their Saints. They can’t just say “the late economist Jim Buchanan”. They say “Nobel-laureate colleague Jim Buchanan.” They put their Saint on his pedestal and then link themselves to it … like any loyal acolyte is want to do..

Economists often complain about the observed fact that “everyone is his own economist,” in an expression of the view that scientific counsel fails to command the deference it seems to warrant.

MD: Economics is not a science. In fact, it is an open insult to science. And show me any real science where its scholars don’t agree with each other at all … where they all have there own pet theories … and where there are no natural principles and facts … only disputed ones. There are lots of examples out there (e.g. cosmology, psychiatry, numerology, politics) … but they just expose themselves as junk science. Yet they command high salaries … and if they can concoct the right stories, they influence things … usually in a really bad way.

In the absence of an effective exit option, however, everyone will continue to be, and should be, his own economist, at least to the extent of participating in the selection of constraints that are to be imposed collectively, constraints that affect the actions of everyone simultaneously.

MD: The only “real” economists are the traders. And we are all traders. Some traders, in addition to trading, analyze the trading process to death … yet somehow escape an obvious definition of money … and then failing to embrace  this obvious and provable definition, spread absolute nonsense!

The effective scientific community in economics is, therefore, necessarily inclusive in a sense that is not applicable in natural science.

MD: There is no “scientific” community in “economics” … effective or otherwise. There isn’t even common sense! What does this statement say? Economics is “not” natural science (which all “real” science is by the way), and therefore the oxymoron “scientific community in economics” is “inclusive”. Well, I guess if I have properly parsed the assertion … all economists are “not” scientists. Here’s one saying it directly while pretending to be a scientist.

“Doing economics,” as the specialized activity of economists, should reflect a different emphasis on the transmission of basic knowledge relative to the discovery of new knowledge at the scientific frontiers.

MD: Do we ever hear of someone “doing” chemistry … or physics … or geology? It’s not something you do. And “transmission of basic knowledge”? Economics has no such “basic knowledge” … but every economist is a transmitter just the same. And they’re not going to discover new knowledge by ignoring the obvious … beginning with what money obviously and provably is.

Because of the public features of economics noted, the activity of “doing economics” must be more akin to that observed in the behaviour of the ordinary scientist who rarely makes discoveries.

MD: … unless they are “real” scientists … who make discoveries in a very disciplined fashion … using what they call a scientific method. If economists had any similar discipline, they would know what money is by now. And when told, and given the proof, they would not respond “that is unorthodox”. Remember, a flat Earth was once orthodox. And the Earth being the center of everything was dispelled by a scientist … using the scientific method. And it still took over 200 years for the pretend scientists (religious orthodoxy) to get it! In fact they never did. They just changed their stories to reflect that they never said it was the center of everything in the first place. That’s what took 200 years! In the process, Bruno lost his head … because they were still in the process of rewriting and re-endoctrinating … i.e. re-deluding.

In modern practice, too much talented intellectual capital is used up in searches for the solutions to stylized puzzles with little or no relevance for the ongoing, necessarily receptive and sometimes boring, activity of “teaching” the long-accepted principles of the science.

MD: “The intellect” is not capital … especially when it is in an economist’s skull. Capital is the thing that can be exchanged for labor to achieve a certain productive goal. But what is properly being described here is Ludwig von Mises’ books. They are of no relevance to the extreme. He spends tome after tome after tome trying to explain why traders trade … but is totally clueless about what money is … as are his disciples, the Mises Monks.

DBx: Yes. Buchanan here – as in countless other parts of his vast writings – explicitly rejects the rule of experts.

MD: But clothed and fed himself with his so-called expertise. It takes a very advanced society indeed to tolerate such nonsense.

He explicitly affirms the moral and political right of everyone to participate equally in the making of collective decisions.

MD: There’s another universally misunderstood term … a “right”. A “right” is just a “defended claim”. Make no claim, you have no right. Make a claim and fail to defend it, you have no right. Throwing the word around in every conceivable context does not change that.

No technocracy, plutocracy, or autocracy for Buchanan. Democracy. Whether Buchanan was correct or incorrect in the details of his assessment of the workability of democracy is a separate question.

MD: … he says … without elaboration. Those of us here at MD know, democracy involving more than 50 people does not work. It can’t. With larger numbers, it just becomes a propaganda exercise and an “ugly” contest.

But either way, for someone such as Nancy MacLean to interpret Buchanan as being an enemy of democracy reveals that she (1) did not read Buchanan’s works carefully, or (2) hasn’t the mental acuity to understand Buchanan’s writings, or (3) intentionally misrepresents Buchanan.

MD: How long has Boudreaux been thrashing this MacLean horse? And look at him take her apart. No facts. No illustrations. Simple name calling. The Mises Monk Saints must command respect at all cost. It is truly straight out religion.

(I strongly suspect that it’s a combination of (1) and (2), for the stunning ignorance on display throughout Democracy in Chains – and in MacLean’s subsequent ad homimen-filled “defenses” of her work – seems to be both sincere and deeply rooted.)

MD: Kettle … you are black. Live with it! … said the pot.

Note also Buchanan’s plea that we professional economists spend less time solving clever puzzles and more time teaching the eternal verities of our discipline.

MD: Note: “professional economists” is “not” an oxymoron … but “economic scientist” obviously  is. There is no science in the way economics is done. But it is a profession. These people are paid … and paid handsomely … for this nonsense … and it’s pay that makes someone a professional.

He’s wise to issue this plea. Again and again and again and again conveying to students and the general public the basics of economics – for example, the reality of unintended consequences,

MD: What we have is the reality of “intended” consequences. “Inflation” is the intended consequence of the money changers … most of whom profess to be economists. With a “proper” MOE process, there “is” no inflation. It’s not an “intended” consequence. It’s a result of simple addition, subtraction, and objective discipline.

the universality of the law of demand,

MD: Which of course doesn’t apply to any economic thinking … both the Mises Monks and the Keynesians completely ignore the requirement that money maintain perpetual and perfect supply/demand balance … it’s the nature of every trade, so for sure it is the nature of a trade spanning time and space.

and the importance of the fact that nearly all decisions are made ‘at the margin’

MD: If that’s the same as saying … at the next “instance”, this is just stating the obvious … and is totally immaterial. Economists love to put out this drivel.

– is not sexy and it carries with it almost no professional rewards.

MD: Nor does eating an apple. Both are equally complicated.

Yet performing this duty successfully is the highest and finest service that a good economist can perform for humanity.

MD: What a joke! Economists performing a service for humanity? You call “improper” MOE process manipulation performing a service. You call ignorance of the obvious performing a service?