Austrian School vs. itulip / FIRE

[gwynedd1]

Re: Austrian School vs. itulip / FIRE

I have always thought of Itulip as being a pragmatic survival tool for the individual. Hudson or Keen would be good idealogical points of view. The marginal utility theory that supposedly vanquished the labor theory of value takes into account how people act according to the current climate. Obviously bomb factories dropped in value after the peace in WWII was settled. Liquor was increased in value after the lifting of prohibition. Thus market shocks can cause temporary high profits or losses as a function of utility. Monopolies also distort these markets. Labor theory of value may not match the current market, but it is in constant pursuit.
It is also fundamentally flawed to assume a pure market economy as if they exist with very specific cultural influences and law. Gold as a standard is a perfect example since its not a market function to declare a legal tender. Its a codified cultural practice.

But hey, oligarcs like marginal utility theories just as they like Malthus because it justifies everything.

[gwynedd1]

Re: Austrian School vs. itulip / FIRE

Actually C1ue I can see that I am getting to you and that your arguments do not work against what I write. You want to know why I know that? Because you are attacking me as a person/individual and this is what someone does when they cannot win an argument. Stop the debate by declaring someone is X.

It is a good tactic but it doesnt work on me.

You just spent time attacking your opponent so it looks like he might be getting to you.

You seem to not understand what EMH is. Let me pull it up for you.

In finance, the efficient-market hypothesis (EMH) asserts that financial markets are "informationally efficient". That is, one cannot consistently achieve returns in excess of average market returns on a risk-adjusted basis, given the information available at the time the investment is made.

http://en.wikipedia.org/wiki/Efficie...ket_hypothesis

I really post a lot of stuff but say nothing? That is funny that you are the only one who has observed this while other posters in both the select forum and the open forum have enjoyed my commentary and debates. Again this goes back to you not being able to win the argument.

You can add me along with c1ue.

And yes you are trying to win the argument, everyone one of them on this board because you think your policy prescriptions will work best and that you know best.

Again I must state that I take the position that each individual person knows what is best for them. Unfortunately this is something you will never comprehend.

Collecting rent is best for me. Collecting rent is best for you. History shows its bad for all. Game theory dilemmas are classic examples where self interest alone fails.

I never said Libertarianism is different than the free market. You were not clear in your previous post wether you were referring to "free markets" or the efficient market hypthesis which if you can read the above are different concepts. I think you confused the concepts.

In your previous post you said "Then we have the fallacy of the 'efficient markets' thesis - which libertarians everywhere swear by: the idea that the free market will always provide the best solution for any problem."

Okay efficient market thesis to me is talking about the efficient market hypothesis not free markets. First you state efficient markets thesis then state free market later in the sentence.

Maybe we are confused here on what you are talking about. Because to me efficient market and free market are two different things.

The Efficient Market Hypothesis (EMH) was developed and championed by the Chicago School not the Austrians (who are mostly Libertarians). As far as I know there is no "Libertarian" school of economic thought.

Its associated with so called "free market" but that is the problem with Libertarians. There are a lot who go by that name.

Now I am like EJ that my base is in Austrian economics but I use different parts of other economic schools of thought to glean an understanding of the modern economic system. My problem with you is your constant attack of Austrian economics and your silence against Marxism etc. This is a tell tale sign that you harbour Marxist sympathies, again I could be wrong.

Austrian economics creates Marxism. "Free markets" based on self interest becomes feudalism, and as labor is reduced to subsistence they become virtual slaves. Then the slaves revolt. That is why China, a one time capitalist mecca became Marxist. Its simple human nature. People want to expend as little energy and take as little risk as possible so they seek monopoly power. People also like to maximize profits thus the one in position to do so will reap them, and that will be the one who has the strategic advantage of resources. Why bake cookies if you can monopolize the flour mills?

I believe I have stated multiple times that I am a Libertarian and believe in the free will of people and markets. You on the other hand have not said what your idealogy is which also leads me to believe you are harbouring socialist government intervention or Marxist sympathies. There is nothing wrong with this but at least come out and say it instead of trying to cache it in code language and trying to trick other people on Itulip.

That would be progressive era and classical economics like JS Mill, Ricardo and Adam Smith and Henry George in my case. Very simply revenues of the state should be raised entirely from resource values with no taxes on labor or capital. However I believe in only a partial taxation of resource rents so that the market can still price them.

I do not believe that Libertarians think that the market is efficient due to the fact that they believe in free markets. It is obvious to anyone with rational thought that markets are not efficient and that society is not efficient.

Libertarians accept this fact and say let it be, instead of trying to change every human interaction/thought/reaction by legislating it through government.

Unless you believe in anarchist forms of government it will be inconsistent, and few believe in the other extreme either.

[gwynedd1]

Re: Austrian School vs. itulip / FIRE

Sharky, Forget what Clue says. I call your attention to this chart. This is the only chart that matters when trying to figure out if a fiat money system or increasing the money supply increases inflation. Data comes from the Minneapolis Fed Reserve.

The usual fallacy of Say's law used to prove that increasing money supply just causes inflation uses equity spending models. Since we have an economy of deficit and equity spending, increasing the money supply does not just increase inflation. It affects debtors and creditors in an inverse relationship.

[gwynedd1]

Re: Austrian School vs. itulip / FIRE

How much compensation do I get for the risk? Do I get to earn a profit aside from the risk compensation? Are the tolls considered to be earned rent forever or at some point am I just a rich rentier bridge owner who sits back and collects the money while smoking a cigar?

How long do you get to keep the parking space after you shoveled it? Most people seem to agree not forever. I'd say a few more days for heavy snow.

If I build/buy a house because I expect a bridge to be built that increases its value, shouldn't I be compensated for the risk involved? What if no bridge gets built?

Since you are getting a bridge, and another person is not, there is a market value whether you ultimately get the bridge or not. That is why 10% verse 5% returns do not imply value without a risk adjusted basis. The bridge has a probability of existing, and that will be priced into the market value. I'd always buy a plot where a bridge might be over one where it might not be. You are taking less risk that the bridge might not be built compared to a person building on a spot where it will probably not go.

This idea could be thousands of pages of debate, but suffice it to say that whether the goal is to "apportion the taxes to those who can pay" or "close the wealth gap" or "punish the rich" the end result is about the same.

Taxing economic rents discriminate in the same way monopolists price discriminate. For example:

You only tax a certain kind of rich in this case of price discrimination. The monopolist rather than the rich consumer will pay this tax. When the rich pay more for the product, it does not drive up the price for the poor person if price discrimination is achieved. However in this case its not the rich, but the price discrimination being taxed. If a poor person will pay $5 and the rich will pay $8, then a $1 tax will tax the rich monopolist and not the rich consumer because the rich consumer will not buy it over $8 and will substitute. The poor person is not in the picture because they always buy brand X. The threat to buy brand X instead of Y keeps the monopolist from passing the cost. In this case the monopolist would still rather get the $7 and eat the tax. All resource rents work like this.

http://tutor2u.net/economics/revisio...imination.html

Note also no difference in goods or service output. If I were to tax the monopoly on their high priced brand, it would make little difference to the rich person since they would balk beyond their higher natural price. If on the other hand the the good was taxed equally, it would punish the rich and poor alike.

You can basically punish the idle rich and every MBA should know this since they know about price discrimination, and try to profit from the rich in the same exact way of tax discrimination of resources. I choose that example because it is one of the few surviving instances of this basic truth because business is business and they will not let profit die on the history books. The desire for profit is what removed this concept from the public account.

But substitution always prevents a general rise in price when their is a tax on rents.

Isn't the entire point to effectively raise tenant income by reducing the tax burden on it? Therefore wouldn't this increase in tenant income translate into higher property rents?

Lowering taxes just raises the land price and borrowing costs which are converted into interest payments. This loss of tax revenue then must be shifted to labor and capital.

[ProdigyofZen]

Re: Austrian School vs. itulip / FIRE

Gweyn, we already know we disagree from the many debates we have had here. Go on believing what you believe. The reason why you believe that libertarianism leads to marxism is because you think that way.

It is hard for me to conceive being in a position of power and abusing it because I know that I wouldnt. You on the other hand know that putting someone in a position of power will cause them to be corrupted because you know deep down that you would be corrupted in that position.

Te nosce. I know that I would not be corrupted because of the principles I believe in. And yes I want a form of government as close to anarchy as possible. being on the right means being as close to no government as possible.

Everything else is on the left which is where you reside. Left of center or far left I dont know but Fascism, Marxism, Socialism all fall on the left.

And I attacked my opponents ideas, I did not attack him as an individual or his character like he did me. But I wouldnt expect you to understand the difference.

[gwynedd1]

Re: Austrian School vs. itulip / FIRE

Frankly I do not hold any hope that Dr. Hudson's recommendations will ever be carried out barring the ascension of an American dictator or the collapse of the present American economic paradigm.

The vested interests are far too well financed, and it is increasingly clear that you can rob the everyday person by just removing the theft from immediate loss into future, but no less real losses.

It isn't stupidity per se, but it is something perhaps inherent.

I think that is basically true. The United States with lots of land and liberalism and its Constitution protections took a long time to defeat but its pretty much gone as we know it. The only thing you can do is keep your head about water by accumulating assets to offset falling wages which will make there way to subsistence.

China is an emerging market. However it seems few people today ever wonder what it emerged from.

http://east_west_dialogue.tripod.com/id1.html

[ProdigyofZen]

Re: Austrian School vs. itulip / FIRE

Gwyn, do you not see the direct correlation between going off the gold standard and increasing CPI? When we finally went off any form of gold standard the Fed was able to increase the supply of money worldwide which in turn increased asset prices and the CPI exponentially.

Why are athletes paid 20 million dollars a year today when 40 years ago they were paid $20000 to $60000?

I would say for the first 150 years of the United States the historical norm was deflation in the CPI.

Did you not look at the graph or even care to see the inputs?

[gwynedd1]

Re: Austrian School vs. itulip / FIRE

Gweyn, we already know we disagree from the many debates we have had here. Go on believing what you believe. The reason why you believe that libertarianism leads to marxism is because you think that way.

Marxism is just another slave revolt. Of course I think a system that has been around for thousands of years will end up the same way. What you are advocating is nothing new. You always end up with gentry and slaves until some stress comes along. When the productive base is squeezed to basic subsistence, any stress will destroy it as it has happened all through history.

It is hard for me to conceive being in a position of power and abusing it because I know that I wouldnt. You on the other hand know that putting someone in a position of power will cause them to be corrupted because you know deep down that you would be corrupted in that position.

Its a dilemma. The Praetorian Guard of Rome basically became the oppressor instead of the protector. The Janissaries did the same to the Ottomans.

The struggle between Liberty and Authority is the most conspicuous feature in the portions of history with which we are earliest familiar, particularly in that of Greece, Rome, and England. But in old times this contest was between subjects, or some classes of subjects, and the Government. By liberty, was meant protection against the tyranny of the political rulers. The rulers were conceived (except in some of the popular governments of Greece) as in a necessarily antagonistic position to the people whom they ruled. They consisted of a governing One, or a governing tribe or caste, who derived their authority from inheritance or conquest, who, at all events, did not hold it at the pleasure of the governed, and whose supremacy men did not venture, perhaps did not desire, to contest, whatever precautions might be taken against its oppressive exercise. Their power was regarded as necessary, but also as highly dangerous; as a weapon which they would attempt to use against their subjects, no less than against external enemies. To prevent the weaker members of the community from being preyed on by innumerable vultures, it was needful that there should be an animal of prey stronger than the rest, commissioned to keep them down. JS Mill

Te nosce. I know that I would not be corrupted because of the principles I believe in. And yes I want a form of government as close to anarchy as possible. being on the right means being as close to no government as possible.

Government power is not the only power. There is no absence of it. Any absence of it will make the existing power the defacto government. If it were near a desert, it would be the river people who rule.

Everything else is on the left which is where you reside. Left of center or far left I dont know but Fascism, Marxism, Socialism all fall on the left.

The only way to preserve private land ownership is redistribution of some kind or we will destroy ourselves. We cannot create an idle class of wealth. Its the "free market" that gave the rentier class enough power to pervert our government in the first place. Neither of us will get our way because the rentiers own the government. Even if we got your way, the rentiers would just get rid of the shell they now hide behind. They will not allow your free market.

And I attacked my opponents ideas, I did not attack him as an individual or his character like he did me. But I wouldnt expect you to understand the difference.

I thought he attacked your ideas and you just punctuated this with an insult by calling me stupid.

[c1ue]

Re: Austrian School vs. itulip / FIRE

It is hard for me to conceive being in a position of power and abusing it because I know that I wouldnt.

Clearly you are both young and naive.

And of course, we all know that the bad people think of themselves as bad. They are evil, which is why they do what they do.

There is no such thing as "power corrupts" and so forth.

/sarc

Why are athletes paid 20 million dollars a year today when 40 years ago they were paid $20000 to $60000?

Because 40 years ago there was no such thing as a star athlete, and television/radio/product promos were in their infancy.

Ted Williams, Stan Musial, Jim Palmer, etc etc never made that much money because the game simply wasn't that wealthy at that time, nor were the contractual arrangements players worked under such that they could fairly fight for a larger share of revenues.

For that, you can thank the MLBPA - not the free market.

I'm still waiting for how the Libertarian prescription of how to fix our FIRE addled economy differs from the Chicago school's: i.e. do nothing.

[gwynedd1]

Re: Austrian School vs. itulip / FIRE

Gwyn, do you not see the direct correlation between going off the gold standard and increasing CPI? When we finally went off any form of gold standard the Fed was able to increase the supply of money worldwide which in turn increased asset prices and the CPI exponentially.

No doubt. However preventive medicine is not a cure, and that is the problem with Austrians. Unless you realize that there is evil in any market system we choose, Austrian economics will be applied to the under class. People will die in the streets for the sake of "efficient markets". Meanwhile monopolists will consider their profits a fair price. The rentier class now has enough power to buy up all the gold. It will just become another Federal Reserve monopoly in the gilt of gold.

Why are athletes paid 20 million dollars a year today when 40 years ago they were paid $20000 to $60000?

Inflation helps debtors and hurts creditors other than that it doesn't matter.

I would say for the first 150 years of the United States the historical norm was deflation in the CPI.

Did you not look at the graph or even care to see the inputs?

I would also say those deflationary times were a living hell in the 1870s and 1930s.

[gwynedd1]

Re: Austrian School vs. itulip / FIRE

You continue to ignore the work of Hudson and many others.

Government must have income in order to provide services to citizens.

These services aren't just overt activities like law enforcement, national defense, or welfare, but also include roads, schools, waste disposal, water supplies, and so forth.

The notion that removing property taxes somehow prevents the bad parts of government while preserving the good parts is ridiculous.

Secondly it has been conclusively shown that low property taxes only help the banksters and rentiers.

Even should you own a property free and clear without property taxes, ultimately your ownership can and will still be abrogated by other means, such as destruction of the community around you (see Detroit), privatization of previously public services (toll roads/bridges), privatization of law enforcement (see Eastern European corruption), and so forth.

He is actually right. Taxes on property do invade my space and do affect me personally. There is only one thing worse, its when people tax what I do with my hands. Given the choice, we tax land.

[gwynedd1]

Re: Austrian School vs. itulip / FIRE

One area, if a I may, where FIRE and Austrian economics might have common ground is on the current merchantalist policies of subsides, tax favoritism, and all forms of government monopolies handed over to private interests. We ought to work together on those issues.

[metalman]

Re: Austrian School vs. itulip / FIRE

yow! is this the thread to integrate practical venture capital/entrepreneur productive economy vs fire economy macro economic theory with austrian saving/household vs keynesian credit/consumer banging economy theory?

[ProdigyofZen]

Re: Austrian School vs. itulip / FIRE

Hahaha good one Metalman.

I would say that a lot of these "internet companies" arent really productive at all. They just arbitrage other jobs away. Who needs another social network website or the myriad of other ridiculous internet companies that are created.