Austrian School vs. itulip / FIRE

[Ghent12]

Re: Austrian School vs. itulip / FIRE

Not correct.

My examples encompass a number of outcomes which are, in order:

1) Hitler and the German people: the undertaking of a long series of actions for which individual Germans of the time, who are still alive today, cannot understand why they did it.

If indeed these were 'conscious' decisions, why then do all these people fail to understand what they personally did at that time? I've seen any number of interviews, as well as spoken with many Germans, who even a few years after the fall of Nazi Germany were unable to verbalize just why they participated in that movement. Note that this doesn't just encompass the heady fun part of the German Renaissance, but also the nasty being firebombed by Americans and rolled under by Russian tanks part.

Why indeed were even Jews not directly in the concentration camps - such as those Jewish soldiers awarded the Iron Cross - not speaking out against that very behavior? There are examples where such individuals moved to concentration camps because while they themselves were exempt, their families were not.

Clearly then there is something beyond so called independent, rational, conscious thought at work here. The mania during a bubble is little different - it isn't that the facts are different, it is that everyone only seems to focus on the positive.

2) Cult leaders and mass suicides: Again, if an individual is truly self aware, how then does suicide benefit them? Even if there is some promised reward beyond death, how then does this apply to others like their children? The point again is simple: there is something beyond mere individual volition at work.

3) Fashion: while there are recognized leaders in fashion, there is no such thing as consensus. Rather somewhere in the interaction of social and professional ties, consensus appears to emerge via concurrent development.

Who then drives 'x' fashion this season vs. 'y' fashion the next? And if there is no clear leadership, how then can the individuals determine what fashion is (or is not)?

All 3 examples are intended to show that the true independent volition is largely a myth.

We are, for the most part, a product of that which surrounds us. And if so, then truly independent thought is quite difficult and rare. And conversely, there is such a thing as a net mental state which drives human behavior.

Another excellent example I see comes from Japan. In Harajuku, there are groups of Japanese who dress up in outrageous costumes and hang out in the side streets. 10 years ago, a big fashion among young girls was to get super tanned (i.e. orange or black), wears skimpy pastel halter tops and shorts, and wear truly gigantic solid heels (i.e. 7 or even 9 inches). I could give numerous more examples, but the amusing anecdote is this: in each grouping - every individual is clearly subscribing to a specific fashion sense despite being a 'rebel' compared to the 'typical' Japanese.

Or in other words, they're rebels like all their friends.

All I see are influences and choices. Your examples do not prove your point just because the actors do not understand the reasons why they made the choices they made. The point is that they still made those choices given the circumstances they were in. You are arguing that "truly independent thought is quite difficult and rare," but that is not the argument you were making before regarding conscious choice where you were saying that the people in those three examples were not exercising conscious choice. In other words, while you have established that the people in those circumstances were influenced by others, you have not established that the choices they made were not conscious choices. The people in your examples appear to have made conscious choices in the circumstances they were in.

Further, I am deeply troubled by the implications of your statements. Although I understand the context of your argument, that there is a "net mental state" at large that "forces" [sic] behavior, what you seem to imply is that people cannot be held accountable for their actions because their actions are not their own. You seem to be arguing against the very notion of responsibility itself--that people should be held accountable for what they do. This is indeed troubling.

Overall I think this is about influence. The implication from your argument, taken admittedly to an extreme, is that because there is any influence on people then there is never conscious choice by people. I must categorically reject that notion and everything derived from it.



To get back to the discussion about economic theories not accounting for some "net mental state," I think I would have to disagree. I don't see how the Austrian school, for instances, has reduced predictive capabilities according to your theory of a "net mental state," nor where the clash is between this general mood and any specific economic theory. Can you clarify your entire position on this "net mental state" please?

[Mashuri]

Re: Austrian School vs. itulip / FIRE

Not correct.

My examples encompass a number of outcomes which are, in order:

1) Hitler and the German people: the undertaking of a long series of actions for which individual Germans of the time, who are still alive today, cannot understand why they did it.

If indeed these were 'conscious' decisions, why then do all these people fail to understand what they personally did at that time? I've seen any number of interviews, as well as spoken with many Germans, who even a few years after the fall of Nazi Germany were unable to verbalize just why they participated in that movement. Note that this doesn't just encompass the heady fun part of the German Renaissance, but also the nasty being firebombed by Americans and rolled under by Russian tanks part.

Why indeed were even Jews not directly in the concentration camps - such as those Jewish soldiers awarded the Iron Cross - not speaking out against that very behavior? There are examples where such individuals moved to concentration camps because while they themselves were exempt, their families were not.

Clearly then there is something beyond so called independent, rational, conscious thought at work here. The mania during a bubble is little different - it isn't that the facts are different, it is that everyone only seems to focus on the positive.

2) Cult leaders and mass suicides: Again, if an individual is truly self aware, how then does suicide benefit them? Even if there is some promised reward beyond death, how then does this apply to others like their children? The point again is simple: there is something beyond mere individual volition at work.

3) Fashion: while there are recognized leaders in fashion, there is no such thing as consensus. Rather somewhere in the interaction of social and professional ties, consensus appears to emerge via concurrent development.

Who then drives 'x' fashion this season vs. 'y' fashion the next? And if there is no clear leadership, how then can the individuals determine what fashion is (or is not)?

All 3 examples are intended to show that the true independent volition is largely a myth.

We are, for the most part, a product of that which surrounds us. And if so, then truly independent thought is quite difficult and rare. And conversely, there is such a thing as a net mental state which drives human behavior.

Another excellent example I see comes from Japan. In Harajuku, there are groups of Japanese who dress up in outrageous costumes and hang out in the side streets. 10 years ago, a big fashion among young girls was to get super tanned (i.e. orange or black), wears skimpy pastel halter tops and shorts, and wear truly gigantic solid heels (i.e. 7 or even 9 inches). I could give numerous more examples, but the amusing anecdote is this: in each grouping - every individual is clearly subscribing to a specific fashion sense despite being a 'rebel' compared to the 'typical' Japanese.

Or in other words, they're rebels like all their friends.

You seem to be conflating rational action with some degree of high self-awareness or introspective thought, but that's not the case. Every person acts with imperfect information and uncertainty in the future (otherwise, there would be no need to act) and they certainly don't always get what they expect. A person does not need to know why they are doing something to act rationally. They just simply need to be aware of a desire for a certain situation and consciously take action to achieve said desire. That's where the consciousness is -- in the action and not in the "why" so to speak. I've done some foolish things in my past but, at the time, I would not have done them if I didn't expect to obtain some marginal value out of them, even if was simply some form of emotional satisfaction.

You describe what happened, but not why. For these people, as I note above, cannot themselves explain why. If the individual who undertakes the action cannot explain why, then how is it truly 'their' decision?

Nobody can describe why so, by your logic, nobody owns the decision. This is absurd and removes responsibility from all actions. To truly explain the "why" of everyone's decisions requires full knowledge of their subjective values. That requires omniscience.

Again, you describe what happened in the finest non-Austrian sense, but not why. To glibly pass off these individual's actions as being fooled by some charismatic person is not correct because there are plenty of cult leaders who fail to accomplish the same thing, or even lesser degrees of sacrifice.

Straw man argument. I stated that the cult leaders affected the beliefs of the ones who poisoned themselves. The ones who didn't poison themselves were not convinced enough that death was in their own best interest, so they chose life. The actual choices and actions, regardless of what they consisted of, were still carried out individually.

Clearly you don't spend much time around women. Because they don't have a conscious flow chart that says, it is 2011, therefore 'x' fashion is hot. You seem to think that it is individual's choices which drive fashion, when in fact it is something else driving the individuals.

Again, you assume rational action can only happen as some sort of fully-informed decision-making process. I think you misunderstand the meaning of rational because it is misused so much in economics. Rational action happens regardless of how much information a person has. That person may fail to get what they desire, but that doesn't change the fact that they were rationally acting on the belief that their actions would achieve their desired goal at the time.

This is completely wrong because the fashions made available are made BEFORE purchases occur; at the same time the leaders in fashion regularly 'miss' the 'fashion of the season' thus cannot be said to be themselves driving fashion.

How does this refute anything I said? Sellers are responding to and trying to predict and persuade what consumers desire and some succeed while some don't. So?

This is what every libertarian loves to think - that they, like lamp posts, stand alone in the night.

And equally as with libertarians, this is wrong. While there are individuals who are truly unfettered by other's (and their own) expectations, the reality is that most of us are affected and act in ways which both others and our own training dictate.

Another straw man. Did you read the parts where I said people affect other peoples' beliefs and even priorities? How do you jump from that to what you stated above?

Others let you slide with your failure to directly contribute to the discussion. Posting up links doesn't constitute discussion, but then again you really aren't interested in discussion.

I'm certainly not interested in irrelevant discussions due to miscomprehensions. Keep trying though.

[Sharky]

Re: Austrian School vs. itulip / FIRE

That wasn't the scope of "Human Action", which was to explain human economic behavior regardless of their differing moral values. Mises even goes to great lengths explaining why in the book.

I'm still working my way through the book, so I'll be interested to see what Mises has to say.

However, the point I'm trying to make is that to me, it doesn't make sense to consider action without morality. To consider it, one would not have endorse a particular morality; rather, just the fact that when people act, their morality has a significant influence on the choices they make.

How is it a psuedo-axiom? True or false: All individuals engage in conscious actions toward chosen goals.

False; all individuals do not engage in conscious action toward chosen goals. What about someone who is unconscious, or in a coma? What about someone whose mind is not fully functional, such as a schizophrenic? Do newborn babies have conscious goals?

Taking a step back, what is an axiom? It's an irreducible primary. The statement that "all individuals engage in conscious actions toward chosen goals" is neither irreducible nor primary.

Math is applicable to the real world. Ask any engineer or physicist.

OK, you can ask me. My degree is in math; I'm an engineer and former rocket scientist.

Only some math is applicable to the real world. It's very easy to make assumptions / postulates that aren't true, and then to derive an entire mathematical system from those assumptions. Even if the derivations are correct, if the original assumption does not accurately reflect reality, then the system as a whole won't reflect reality either.

You misunderstand rationality here.

That's an odd definition. In other words, there's really no such thing as irrational behavior, then, right?

Induction typically needs to happen in controlled environments to be useful.

I disagree. Most of what we as humans know about the world, we know from induction (for example, all concepts are determined inductively). That kind of thing is pretty useful to me, and it certainly didn't happen in a controlled environment.

I never said induction couldn't result in truths but you cannot deny that it is imperfect. If it were perfect then it would result in true conclusions 100% of the time. Does it?

The nature of the inaccuracies of induction is often misunderstood. Later knowledge does not contradict earlier knowledge; it just specifies the conditions under which the earlier knowledge was true. For example, Newton's equations of motion were not contradicted by Einstein's relativity; the latter just constrained the former to rates of speed much slower than the speed of light.

Induction is very useful but deduction is the only method that, assuming the premises are true, will garner true results 100% of the time.

You also have to correctly apply deductive logic, of course. For example, Rothbard says:

In order for action to occur, the actor must be in a state of uneasiness or dissatisfaction. (If he were perfectly content, he would not act.) Along with the uneasiness, the actor must be able to imagine a more satisfactory state. Finally, the actor must believe that purposeful behavior has the power to remove or reduce the uneasiness. If this last condition were lacking, the unhappy person would not act, since he would be unable to conceive of any way to improve his situation.

At best, the conclusions listed here only have a very weak deductive connection with the "axiom." This strikes me as sloppy.

EDIT: BTW, "All men are mortal" is an axiom because it cannot be proven until every last man actually dies. We accept it as an axiom because denying it results in absurd real-world conclusions.

I disagree. "All men or mortal" is not an axiom (it's not a primary nor irreducible), and it can be proven before every last man dies -- by inductive reasoning.

The approach of discarding induction, as done by empiricists like Hume, means that they are really rejecting concepts -- which also means that they embrace uncertainty, as Mises did -- while remaining precarious and unreliable.

@Mashuri: thanks very much for your comments. They have indirectly helped me to answer my own question from the OP.

[Sharky]

Re: Austrian School vs. itulip / FIRE

Property taxes destroy the concept of private property. They are immoral and inconsistent with free enterprise-- or to restate, they are consistent only with socialism. This should be obvious on its face to anyone who gives it even a moments thought.

Income taxes destroy the notion of liberty; if you pay income taxes, you are a slave to the government. They get paid first; you get paid second. You do not have control of the fruits of your labor, just like a slave does not have control over the fruits of his labor. Again-- completely obvious to anyone who bothers to think about this.

Thanks for re-stating this. I completely agree. It seems to me that the reason many (most?) people don't see this has a philosophical basis: they simply don't see anything morally wrong with forced sacrifice.

You simply can't have a system that protects individual rights by requiring that those rights be violated, such as in the form of property or income taxes. OTOH, many people who support taxation also explicitly wish to deny individual rights....

Incidentally, Michael Hudson is a Marxist and is thus utterly worthless to anyone who cares about free enterprise. Really, it mystifies me why he gets any traction here. Marxism is nihilism, and is morally reprehensible. Hudson, consequently, is reprehensible.

I agree here, too, on all counts. There seems to be a tendency to think that since someone's observations or theories are useful or have predictive value, that automatically that means their proposed solutions are good ones -- when, of course, one does not imply the other.

[Sharky]

Re: Austrian School vs. itulip / FIRE

We have gotten into this argument about fire fighting with our fundamentalist libertarian friends in the past.

"fundamentalist libertarians"? Really? Why the derisive terminology?

The actual real world history of fire departments in the US, the UK and other countries is that the first fire emergency companies were private. They were paid for by insurance companies to protect property. What happened was that the fire crew responded to a fire in one home that was insured by Insurance Company X but the adjacent houses were not. The adjacent houses caught on fire and the whole block burned down. Competing fire departments fought over a water supply, if there was one available. To end the madness insurance companies banded together to prevail upon towns to finance the development of a reliable water supply for fire fighting and ensure that all building fires were responded to.

That's the actual history.

Not every service lends itself to private ownership. Fire emergency service is a prime example of one that doesn't.

What you've explained is a good example of how private companies (insurance companies) used the force of government to transfer some of their risk of doing business onto the public, in the form of increased taxation.

This was not a failure of private ownership; it was a failure of restraint of government that allowed the cost transfer.

What, exactly, is it about publicly owned fire emergency services that's done better than private services? Are public employees smarter than private ones? Do they work harder? Are they more honest? More reliable? My experience has been: no, no, no and no. The real difference is that government can force things that private companies cannot.

At the margin, people who could afford a house but not fire insurance, when burdened with additional taxes, would no longer be able to afford that house. So, sure, one way to have fewer fires might be to force the poor to move somewhere else and to shift the costs onto the public through taxation. But it's not moral, it defies individual rights and personal responsibility, and it's anti-free market / anti-capitalism.

Given time, private companies would have solved the problems without the help of government. Oh, right, that's "fundamentalist libertarian" thinking....

[c1ue]

Re: Austrian School vs. itulip / FIRE

All I see are influences and choices. Your examples do not prove your point just because the actors do not understand the reasons why they made the choices they made. The point is that they still made those choices given the circumstances they were in. You are arguing that "truly independent thought is quite difficult and rare," but that is not the argument you were making before regarding conscious choice where you were saying that the people in those three examples were not exercising conscious choice. In other words, while you have established that the people in those circumstances were influenced by others, you have not established that the choices they made were not conscious choices. The people in your examples appear to have made conscious choices in the circumstances they were in.

In each example, actions are undertaken and choices made, but equally the individuals involved - in different settings - likely would have made different choices.

A very common example of this is a person sitting in a room full of people with a shot of tequila in front them. All the other people are shouting 'Shot!' 'Shot!' 'Shot!'

The person might hate tequila. They might have religious restrictions against alcohol. They might be allergic.

Yet the majority of people in that focus position will drink the shot even if they don't personally want to.

Remove the crowd, and equally the percentage of drinkers drops.

Clearly then, an individual's action does not axiomatically equal their conscious decision.

Further, I am deeply troubled by the implications of your statements. Although I understand the context of your argument, that there is a "net mental state" at large that "forces" [sic] behavior, what you seem to imply is that people cannot be held accountable for their actions because their actions are not their own. You seem to be arguing against the very notion of responsibility itself--that people should be held accountable for what they do. This is indeed troubling.

The examples I chose are ones which (at least to me) clearly objective individual conscious choices were subsumed by something else.

The purpose of these examples was to show that individual actions do not predict group behavior in many cases. The purpose of 'net mental state' is then to quantify the group behavior at a given moment in time. There have been situations where the individual's behavior was forced in an obvious and extreme manner, but in general the influence is much more subtle yet pervasive.

Overall I think this is about influence. The implication from your argument, taken admittedly to an extreme, is that because there is any influence on people then there is never conscious choice by people. I must categorically reject that notion and everything derived from it.

No, that is not the corollary - because while there are plenty of examples of actions not conscious, equally so most actions are conscious to at least some degree. Net mental human state isn't to judge, but it is to quantify since the behavior of a population depends on it.

To get back to the discussion about economic theories not accounting for some "net mental state," I think I would have to disagree. I don't see how the Austrian school, for instances, has reduced predictive capabilities according to your theory of a "net mental state," nor where the clash is between this general mood and any specific economic theory. Can you clarify your entire position on this "net mental state" please?

The concept of 'net mental state' is quite simple: all economic theories which derive from the bottom up rely on some model of human behavior and interaction.

Marx's views at its most basic are that of both Labor and Capital acting in a purely rational manner: Labor works for what it needs to survive, Capital takes all it can in order to maintain operations and grow.

Yet this fails because Labor does not always demand what it needs to survive - there are many instances of both individual and collective worker behavior which are absolutely not consistent with this view such as much of the 1st and 2nd world going into massive lifetime debt (Ireland).

Equally so Capital doesn't always choose to squeeze everything for itself. There are good VC, if perhaps far far less common than bad banksters.

Looking at the neoclassicist economies - the concept of the 'market' determining 'utility' equally assumes some type of rational behavior.

Yet how 'utilitarian' or useful are fashion fads? They are perfectly understandable from the supplier point of view, but the benefit to the consumer is less clear. Equally so there are bubbles related to this: the Tulip mania being a prime example with Furbys and what not being lesser ones.

Therefore clearly there are dynamics beyond and stretch of utility.

The point is thus simple: in order for any economic theory to be able to attempt to predict future behavior, it must also at least be able to quantify present net mental state.

You seem to be conflating rational action with some degree of high self-awareness or introspective thought, but that's not the case. Every person acts with imperfect information and uncertainty in the future (otherwise, there would be no need to act) and they certainly don't always get what they expect. A person does not need to know why they are doing something to act rationally. They just simply need to be aware of a desire for a certain situation and consciously take action to achieve said desire. That's where the consciousness is -- in the action and not in the "why" so to speak. I've done some foolish things in my past but, at the time, I would not have done them if I didn't expect to obtain some marginal value out of them, even if was simply some form of emotional satisfaction.

You are attempting to define all individual actions as conscious decisions by the individual.

Yet the examples above show that there are plenty of instances where an individual's actions are not a result of a conscious decision - how does a 14 year old decide to face down tanks with a grenade in his hand?

If you insist on this definition, then if I hold a gun to your head and make you jump out a window, the choice to jump was yours, not mine.

Technically your benefit was not getting shot, but I very much doubt anyone would agree that this is a decision you would make were I not present with the gun.

Nobody can describe why so, by your logic, nobody owns the decision. This is absurd and removes responsibility from all actions. To truly explain the "why" of everyone's decisions requires full knowledge of their subjective values. That requires omniscience.

Incorrect, because you are then trying to say all actions are not due to conscious decision when in fact most are. Yet your black and white world view assumes all individual actions are due to decision, and therefore are the individual's responsibility.

The point is that your world view assumes perfect responsibility on the individual's part which also assumes perfect rationality on the individual's part given the information available to the individual at that time. This is the 'efficient market' theory in short form, and one which clearly is incorrect both empirically and via the model of the individual as illustrated by my examples.

Straw man argument. I stated that the cult leaders affected the beliefs of the ones who poisoned themselves. The ones who didn't poison themselves were not convinced enough that death was in their own best interest, so they chose life. The actual choices and actions, regardless of what they consisted of, were still carried out individually.

Sounds nice, but cult members who failed to succeed in poisoning themselves, almost never try to do it right later. So clearly the context and the actions at the time were not self contained in the individual.

Again, you assume rational action can only happen as some sort of fully-informed decision-making process. I think you misunderstand the meaning of rational because it is misused so much in economics. Rational action happens regardless of how much information a person has. That person may fail to get what they desire, but that doesn't change the fact that they were rationally acting on the belief that their actions would achieve their desired goal at the time.

This is exactly the 'efficient market' theory as noted previously, and has been conclusively proven wrong over and over again. People do not act in a rational manner even given the same information; the circumstances do make a difference.

What exactly was the difference in circumstance between August 2006 and August 2007? Yet housing had peaked something in between. All the usual suspects were still spouting their MSM nonsense, yet a point of no return had been reached even before the succession of bank failures.

How does this refute anything I said? Sellers are responding to and trying to predict and persuade what consumers desire and some succeed while some don't. So?

If the same sellers aren't promulgating the 'fashion of the season', and the consumers are consistently agreeing on a 'look' already agreed upon months ago in an overall supply sense, then where exactly was the decision made?

The individual could not have decided that this was the look before it was available, and doesn't know which 'look' is the one which most sellers wind up promoting. If the choice were random, then any single look would almost never win out. If the choice were due to some superior sense, then the same sellers would consistently dominate the look.

Clearly there is some sort of social emergent behavior here.

Another straw man. Did you read the parts where I said people affect other peoples' beliefs and even priorities? How do you jump from that to what you stated above?

So if people can affect other people's beliefs, yet the consequences of actions from this behavior are the responsibility of the victim (per my gun to the head analogy), how then is my lamp post example a straw man?

I'm certainly not interested in irrelevant discussions due to miscomprehensions. Keep trying though.

No, what you're not interested or not capable of doing is putting your own thought out to be criticized.

Keep hiding though.

[c1ue]

Re: Austrian School vs. itulip / FIRE

This was not a failure of private ownership; it was a failure of restraint of government that allowed the cost transfer.

Isn't the entire town burning because 2 private fire companies were fighting over a single water supply a failure of private firefighting ownership?

Isn't the entire town burning because 1 uninsured house is allowed to burn down a failure of private firefighting ownership?

What, exactly, is it about publicly owned fire emergency services that's done better than private services? Are public employees smarter than private ones? Do they work harder? Are they more honest? More reliable? My experience has been: no, no, no and no. The real difference is that government can force things that private companies cannot.

All of the above is true, but you failed one important question:

Will the government employee fail to do what he is chartered to do because of a profit motive?

No.

Whatever you want to say, if a government organization is chartered with firefighting, they will do it. It might not be the most efficient, it might not be the most up to date, but it will not be denied because of you not paying up.

[BuckarooBanzai]

Re: Austrian School vs. itulip / FIRE

Even were the laws of the US changed via some magical act such that all taxes would only be excise, the immediate effect would be that everything would become excise taxable, and the rates would go up.

But keep on trucking.

Have you forgotten the "magical act" called the US Constitution that mandated no Direct taxes? It was in force for ~130 years. Only excise taxes were permitted.

The real "magical act" was the 16th amendment which, along with the Federal Reserve, institutionalized Federal theft and slavery, and destroyed the foundation of the Constitution, rendering it meaningless.

You are either for freedom, or you are against it. It's like pregnancy-- you can't be a "little bit" pregnant, just like you can't be "a little bit" free-- you are either free, or you are not.

Similarly, you are either for Marxism, or you are against it. I don't care what "flavor" of Marxism you like; it's all nihilistic, soul-crushing tyranny.

You are against freedom and against free enterprise, and for crushing the human spirit into nothingness, and sacrificing it on the altar of "practicality", "fairness" or whatever nonsense excuse you make. At least just come out and say it.

[Munger]

Re: Austrian School vs. itulip / FIRE

I'm highlighting this as the primary example that you are incapable of comprehending my writing. Others don't seem to be having this problem. Re-read my posts or give it up.

I'm highlighting this as the primary example that you are incapable of comprehending non-fantasy-based economic concepts. Others don't seem to be having this problem. Re-read (or rather, read) Keynes, Samuelson, Friedman, Stiglitz, and Hudson or give up.

[Munger]

Re: Austrian School vs. itulip / FIRE

WHY IS THIS SO DIFFICULT FOR PEOPLE TO UNDERSTAND?

Because it is retarded.

[llanlad2]

Re: Austrian School vs. itulip / FIRE

Because it is retarded.

LOL.

It's like these people never even played Monopoly. No taxes in that game 1 winner 5 bankrupts.

The notion that you are freer because you hand over all your money to a landowner/banker rather than to a government is retarded.

[Sharky]

Re: Austrian School vs. itulip / FIRE

Isn't the entire town burning because 2 private fire companies were fighting over a single water supply a failure of private firefighting ownership?

Isn't the entire town burning because 1 uninsured house is allowed to burn down a failure of private firefighting ownership?

Those were failures, yes; but they weren't failures due to private ownership. Firefighting in urban areas was new at the time. I see no reason to believe that public firefighters would have done better. The policies, procedures and resource requirements were still being learned, and the private companies would have adapted if they had been given enough time.

All of the above is true, but you failed one important question:

Will the government employee fail to do what he is chartered to do because of a profit motive?

No.

Whatever you want to say, if a government organization is chartered with firefighting, they will do it. It might not be the most efficient, it might not be the most up to date, but it will not be denied because of you not paying up.

In the public system, if someone refuses to pay the property taxes that are used to fund the firefighting, their house is taken away from them by government. How is that really better for them than losing the house to a fire because they refused to pay fire insurance? At least with the latter, there's a chance that there won't be a fire and that they would be able to keep their house.

[llanlad2]

Re: Austrian School vs. itulip / FIRE

Yes, but the whole street may burn down because my dumbass uninsured neighbour had his deep fat fryer go alight.

[Sharky]

Re: Austrian School vs. itulip / FIRE

Yes, but the whole street may burn down because my dumbass uninsured neighbour had his deep fat fryer go alight.

A private system could address that problem as well as a public one. For example, if a fire at an uninsured building threatens an insured building, then it's in everyone's best interest to fight it. Financially, risks for this kind of thing could be covered in the same way that we have private uninsured motorist insurance.

[Mashuri]

Re: Austrian School vs. itulip / FIRE

I'm still working my way through the book, so I'll be interested to see what Mises has to say.

However, the point I'm trying to make is that to me, it doesn't make sense to consider action without morality. To consider it, one would not have endorse a particular morality; rather, just the fact that when people act, their morality has a significant influence on the choices they make.

Praxeology is completely compatible with your view, as it takes subjective values and morality as a given.

False; all individuals do not engage in conscious action toward chosen goals. What about someone who is unconscious, or in a coma? What about someone whose mind is not fully functional, such as a schizophrenic? Do newborn babies have conscious goals?

You have to remember the scope of his theory: Economics. Economic activity, by definition, requires action. If a person is in a coma, is purely reflexive like an infant or is a fully satisfied Buddhist in Nirvana, then they conveniently exclude themselves from the scope of economics anyway. Mises arrived at human action as the ultimate given for economics very deliberately. BTW, a schizophrenic is still capable of rational action from their own point of view. The tin foil wearing man I used as an example earlier could very well be schizo, but he still is able to assess his situation as he perceives it and take action accordingly. Outsiders would see his behavior as irrational, but not he himself. I do get what you mean, however, if someone has particular neurological problems but that constitutes an insignificant percentage of the population.

Taking a step back, what is an axiom? It's an irreducible primary. The statement that "all individuals engage in conscious actions toward chosen goals" is neither irreducible nor primary.

See above. In the context of economics, human action is the axiom. It is not applicable to those who do not act.

OK, you can ask me. My degree is in math; I'm an engineer and former rocket scientist.

Only some math is applicable to the real world. It's very easy to make assumptions / postulates that aren't true, and then to derive an entire mathematical system from those assumptions. Even if the derivations are correct, if the original assumption does not accurately reflect reality, then the system as a whole won't reflect reality either.

We're in agreement here. I never stated that all math is applicable to the real world. The same goes for linguistic logic.

That's an odd definition. In other words, there's really no such thing as irrational behavior, then, right?

See above. The term "irrational behavior" is usually a judgment passed by one individual onto another's actions. The point Mises is making is that all action, by definition, is rational from the actor's point of view.

I disagree. Most of what we as humans know about the world, we know from induction (for example, all concepts are determined inductively). That kind of thing is pretty useful to me, and it certainly didn't happen in a controlled environment.

The problem arises when one is trying to come up with universal economic theories. Accurately inducing economic behavior through abserving current and past events is nearly impossible because there is simply too much data that cannot be gathered. This is why all economic models are fundamentally flawed and Keynes, for example, needs to use "animal instincts" and "liquidity trap" as his excuses for when his theories fall on their face.

The nature of the inaccuracies of induction is often misunderstood. Later knowledge does not contradict earlier knowledge; it just specifies the conditions under which the earlier knowledge was true. For example, Newton's equations of motion were not contradicted by Einstein's relativity; the latter just constrained the former to rates of speed much slower than the speed of light.

I don't deny the usefulness of induction, when done properly.

You also have to correctly apply deductive logic, of course. For example, Rothbard says:



At best, the conclusions listed here only have a very weak deductive connection with the "axiom." *This strikes me as sloppy.



I disagree. "All men or mortal" is not an axiom (it's not a primary nor irreducible), and it can be proven before every last man dies -- by inductive reasoning.

The approach of discarding induction, as done by empiricists like Hume, means that they are really rejecting concepts -- which also means that they embrace uncertainty, as Mises did -- while remaining precarious and unreliable.

@Mashuri: thanks very much for your comments. They have indirectly helped me to answer my own question from the OP.

Mises doesn't embrace Hume's is-ought trap nor does he reject inductive reasoning. He just understands how impossible it is for the field of economics to emulate the objective physical sciences.

I don't see Austrian theory as the end all, be all of economics. I find it the best general economic theory but find other peoples' work in specific parts of economics very useful. Art Laffer's theories on international trade are excellent, for example.