Economics in One Post

Praxeology is the logical study of human action. The prefix praxis means practice, and refers to how human beings act. Economics is a subdivision of human action, focusing on the interactions of humans during production and consumption. It describes the market. The illustrious praxeologist Ludwig von Mises avowed the valueless nature of economics. There are economists who hold economic views that are normative. A call to how things should be. Mises sets them straight. Economics is descriptive. It describes the way things are. Nothing more, nothing less.

The Austrian analysis of economics is host to a difference in kind, as opposed to just a difference in degree, from all other analyses of economics. I will refer to the amalgamation of all other economic analyses as the antiaustrian method. The Austrian method uses deductive logic to ascertain the nature of human action. All other methods rely upon empirical studies or tests to back hypotheses they have about human action. They use graphs, statistics, econometrics et cetera. Mises scoffed at this.*

Frequent readers will notice the usage of the term apodeictic, or apodictic, in reference to a statement that I have made. Apodeictic means logically true. The statements that I call apodeictic are axioms and maxims. It is not my believing them to be true that makes them true. I am impotent in this regard. Regardless of how disconcerting or jovial the understanding of axioms can make one, they are true. Independent of human existence is the truth about human action.

The primordial maxim of praxeology is that humans act. Wow! So controversial. From this maxim all other apodeictic axioms are drawn out, and elaborated upon. Carl Menger, founder of the Austrian School of Economics, provided the subjective market theory of prices. This is a basic tenet of economics, that is indubitable.** Humans, when acting, put value judgements on how much they are willing to pay for specific goods and services. This weighing mechanism is the price system. Barring invasion upon voluntary exchange, prices will approximate the subjective vagaries of the humans valuing them. Apodeictic. There is no room for doctrines of "fair trade" or the "labor theory of value".*** Individuals with fluctuating moods and sentiments place their own values on products. Outside observers are incapable of quantifying the degree of satisfaction potentially or actually obtained between two parties.

People tend to appreciate evidence. I will rack up some more for purposes of clarity. From the maxim that humans act, can be drawn out the maxim of scarcity. Scarcity exists. We do not have access to an indefinite supply of whatever caprices we have. From thence springs the axiom of satisfaction. The realization of scarcity guides humans to act in a way to satisfy their whims. Whether or not they achieve their ends is irrelevant to the fact that they attempt to do so. Try. 

Speaking of try, triangles have apodeictic truths that will be beneficial to get a quick reminder course in. Triangles, of necessity, have no more and no less than 180 degrees. The length of one side must be less than the sum of the lengths of the other two sides. The foundational mathematician Euclid espoused apodeictic maxims as well. The part can never be greater than the whole. If A=B, and B=C, then A is indisputably equal to C. 

I highlight these examples to remind folks that they are in fact dogmatic in their belief of mathematics. The same fervor should be applied to belief in praxeology. 

I believe in absolute truth, but you are no different. I need only to dig deep in the crevices of your mind to extract your belief in the absolute. If you say absolutes truth does not exist, you are affirming that which your vocal chords are decrying. If you think someone who adheres to strict verbal economics is too rigid in their thinking and methodology, turn to yourself. Ask yourself how loose your attachment is to the whole being greater than the part. Or A being equal to C, if A=B and B=C. Do you waver in that belief? If so, you have a skeptical lens that would drive you to insanity if consistently applied. If not, welcome. You are an absolutist. 

There are way more maxims of praxeology, but I hope this rejoinder to statistical economics has wet your appetite. Stay moist, my friends.

Post Scriptum:

*imagine a mathematician defaulting to statistics to try to prove that A=A

** Austria does not adhere to this, just google it

*** marxism 

Charity and Money

Like the plethora of sheeple out there, I used to think charity was summed up in writing a check to some hoodwinker with images of starving children. Ethiopia, the land of my heritage, has been inseparably linked with destitute poverty in the minds of many. Due, of course, to the efforts of the UNICEF box waving do-gooders. Do not take my criticism the wrong way. I do not oppose feeding the children. However, how do we go about feeding the children?

The ends that are sought by sane men are often the same. A parcel of land, a tid bit of food, an iota of insurance, and a smidgeon of leisure time. The means we select set us apart. There are humans, and there are beasts. There is no middle ground. Where you lie on the spectrum depends upon your interactions. There is the "economic means", and the "political means".

"These are work and robbery, one's own labor and the forcible appropriation of the labor of others... I propose in the following discussion to call one's own labor and the equivalent exchange of one's own labor for the labor of others, the economic means for the satisfaction of needs, while the unrequited appropriation of the labor of others will be called the political means." (Oppenheimer, The State)

Dictionary.com defines charity as

 generous actions or donations to aid the poor, ill, or homeless

When the State claims it engages in acts of "charity", we should all let out a barbaric yawp, and a Scroogian humbug. When an advocate of foreign "aid" preaches the merits of invasionism you should hold one thought in your mind. Nonsense on a high-rise. The truth behind their docile facade is theft. Forcibly removing funds of certain people for others.

The State produces nothing. Every action of the State is an act of consumption. Follow the money. How is the State funded? The State is funded by; force, coercion, incursions, expropriation, racketeering, stealing, threatening, bruising, kidnapping, hoodwinking, swindling, hornswoggling, and murdering. These occur in two formats, creating currency and taking currency. The former can only be accounted for by the latter. The bureaucrats "print" money (it's digital now), and demand tribute from the populace. Without monopolizing the usage of weapons against innocent bystanders, this could not be achieved. There is nothing generous about force. There is nothing generous about the State's attempt to aid the poor. The State does not engage in charity.

If you believe in being kind, and loving one another, you should never advocate State action. In order to "help" those people whom you seek to aid, a toll must be paid by human lives.

For those who care about giving, give to voluntary associations. Groups of individuals who are so passionate about aid, that they interact with humans without resorting to guns or the threat of guns. I am that type of a person. Let me aid you in your ventures with voluntary regulating agencies (unlike State regulators) that check the merits of charities for you.

GiveWell.org, and CharityNavigator.org

Dialectic Buchananism Reveals Tribalism

Patrick Buchanan is a person worth researching. Polemical prose in print, and presidential primary proclivities tell me so. An expose on what makes him tic would be a tremendous addition to the political landscape. This is not that. Though he calls himself conservative, and runs The American Conservative, his military views are far from it. If one heard him rail against Republican Senator John McCain and the Iraq invasion, steered at the helm by a Republican president, Pat Buchanan would seem liberal. In his repudiation of overseas adventurism, he is a champion of liberty. Sadly, his affinity towards liberty stops there for foreign policy. Buchanan's views on peaceful exchange between nations is radically illiberal. It is isolationist to the core. It is divisive from the root up. The radical liberal that I am, I will venture to uproot his arguments and expose them for the vestiges of Jim Crow bigotry that they are (I will assume here that bigotry qua bigotry is objectively wrong).

Pat Buchanan, in the December issue of The American Conservative, writes a piece that promotes protectionism. How dare we allow the

opening of America's borders to all goods made by our new friends in the People's Republic of China.

Mercantilism lives. It is beyond me how Buchanan could have worked with Murray Rothbard, when Rothbard held a burning hatred for protectionism (read Rothbard in the mercantilism link). Rothbard calls it a "wall of privilege around inefficient manufacturers". 19th century French economist Frederic Bastiat used satire to swallow whole the pathetic reasoning of local businessmen to enlist Leviathan's blade in suppressing voluntary exchange between individuals across nations. It is fitting that Bastiat chose to enlist the Sun to melt the self-aggrandizing arguments of French mercantilists. He points out how "unfair" the Sun is to the candle industry, because it provides light to everyone on Earth for the mercilessly ruinous price of free. Bastiat's classic can be found in its entirety here.

I made the falsehood of mercantilism clear in my post about the illusory nature of beasts' rights

 Humans do not have to exchange with one another, but they do. Ricardo's Law is apodeictic. The division of labor benefits even those producers who are more effective than others. Even the most talented of humans gains from voluntarily exchanging goods and services. 

 In modern discourse the term "isolationist" has become a pejorative used to deride the greatest statesman for liberty, Doctor Ronald Paul. Time after time, newscasters from all over the accepted political spectrum that Tom Woods affectionately refers to as the 3.5 inches between Secretary Hilary Clinton and Governor Willard Romney. The 4th branch does not disappoint its namesake. These tele-prompt readers claim that reducing the U.S. military presence in Germany and Japan is isolationist. They claim pulling troops out of Iraq and Afghanistan is isolationist. The surface level displays a reduction in aggressive interaction with other countries. Admittedly, this reduction of interaction can appear to be the actions of a hermit unless the unseen consequences are noted. The peaceful interactions, or trade, of producers and consumers across nations is diametrically opposed to isolation. This is in fact the essence of being human. Peacefully interacting with one another. The only way the State can allow this to flourish is to get its mangey hands off of products. To scram or 23 skidoo. Cease and desist its tariffs, taxes and any other form of theft it can conjure up. Buchanan supports Ron Paul's views of the military, thus is no isolationist in this regard. Buchanan is an isolationist in regards to his promotion of domestic producers over foreign producers. If his advocacy did not involve requesting the State to bloody its mitts, then he would be no isolationist. He could choose to only pay for American made goods, and tell his friends to do the same. Instead, he tells the State to steal portions of the gains made by foreign producers, that benefit local consumers.

Statists thrive as all dictators do. Their survival hinges upon the maxim of divide and conquer. Fragmenting society into factions that compete for the treasure chest of stolen goods, State coffers, is the way to purchase votes and keep helming "the calm sea of despotism". Chris Sciabarra, while writing for The Freeman, elucidates Ayn Rand's linking together of statism and tribalism.

Racism, in Rand's view, was the most vicious form of social fragmentation perpetrated by modern statism... Rand argued that racism was an immoral and primitive form of collectivism that negated individual uniqueness, choice, and values. Psychologically the racist substitutes ancestral lineage for self-value and thereby undermines the earned achievement of any genuine self-esteem. Holding people responsible for the real or imagined sins of their ancestors, wielding the weapon of collective guilt, the racist adopts, the associational, concrete-bound method of awareness common to all tribalists. This anti-conceptual tribalism is manifested in the irrational fear of foreigners (xenophobia), the group loyalty of the guild, the worship of the family, the blood ties of the criminal gang, and the chauvinism of the nationalist.

Buchanan is affiliated. He belongs to the pleasantly plump, rosy cheeked, red-blooded American tribe. Their tribe views recent immigrants,  and any folk living outside the U.S., as inferior to the WASPy South and Midwest. Buchanan values the jobs of Protestants of European descent over the jobs of browner people. His bigotry is not even consistent. A consistent bigot would promote U.S. consumers, everyone in the U.S., reaping more benefits than brown consumers elsewhere. He could put that into effect by advocacy of free trade with all nations irrespective of reciprocity. But then again, that would be liberal.

Even more liberal, and radical would be a call to end all State barriers to voluntary trade between humans. Not just those invasions, barriers, initiated by the U.S., but the invasions that any State currently has in place. This would be a victory against bigotry. Without States, voluntary human interactions would increase. Globalization in this inexorably shrinking world of digital and communicational wonders would bring humans together. It would make us one.

The illiberal policies of protectionists wrought "Tribes at War" and their regurgitation today serves the causes of aggression and chaos. To achieve peace we need liberal policies. To bring about spontaneous order, we need anarchy.

Curing the "Capitalist Cure"

A common theme of this blog is a reminder that liberalism is the ideology of liberty. There are degrees of liberalism. The more inclined to individual liberty that one is, the more liberal they are. In relation to the idea of freed markets, you become more liberal as you approach the unencumbered market economy. As you approach the antisocial, fully controlled by the State, economy you become more illiberal or conservative. These advocates entrench the power of the elitists who thrive off of State redistribution. Think automobile bail out seekers, banksters, farm subsidy seekers, and the aristocrats of yesteryear. The common man, the consumer, would be abetted by the freeing of the market.

William Ruger, writer at The American Conservative, purports to represent the free market in his book review of A Capitalism For The People: Recapturing the Lost Genius of American Prosperity. This tract is written by Luis Zingales. Ruger's review can be found in the December 2012 issue. There are varying brands of free marketeers. I will show that both Ruger and Zingales are not defending a freed market, but a highly regulated and enslaved one. I will cure this appropriation of capitalism by shaking their arguments until only the immovable deductively sound structures are left standing. The voluntary structures.

The good ol' boys at the C4SS think that defenders of market anarchism should do away with the term capitalism. To them it is a tainted vestige of the current system. The statist quo is blamed by an assortment of Marxists and Marxist sympathizers as the source of many modern woes. Rightfully so. The system we have in the U.S. today, and at any point in our history, is far from the unhampered market economy that would rid us of many woes. The statist quo is State run or manipulated environmental protection, schooling, healthcare, law, security et cetera. When there is a kritik run on the condition of the environment, schools, healthcare, law code and security the root of these woes should be sought. The underlying reason for cyclical problems in this regard is lack of systemic change. Wrought by uprooting the current system. Much of policy debate revolves around whether the State should have full control of schools or be able to control private school production. Whether the State should have the, Orwellianly named, Environmental Protection Agency (EPA) increase regulations or increase fines. Whether the State should add 50,000 more laws, or increase theft to increase enforcement of the laws on the book. To uproot the woes of damage to the Earth, miseducation of the populace, and injustice in the courts we need to uproot the State. Moral responsibility does not lie with the State. It lies with us. Those who would exchange voluntarily should be allowed to. Those who do not should be sanctioned. The State cannot exchange voluntarily. Sanction the State.

Now, where was I? Ah! Ruger.

Ruger weaves the tale of Zingales's origin to establish his anticrony-capitalist foundation.

Zingales did not want the United States to turn into his home country- Italy- with its disabling crony capitalism, something he saw taking root in American finance.

I shuttered when I read

Zingales wants to reinvent antitrust 

Zingales, and I gather Ruger, want to use the State to stop companies from forming together into Voltron corporations. They want a group of individuals to force another group of individuals not to voluntarily exchange with each other. Backed by the threat of theft, kidnapping, or murder. All this in the name of "competition". Two summers ago I read Ayn Rand's fictional magnum opus, Atlas Shrugged. I was utterly shocked at her ability to satirically refute antitrust laws. Here is an excerpt begining on page 73

The proposal which they passed was known as the "Anti-dog-eat-dog Rule." When they voted for it, the members of the National Alliance of Railroads sat in a large hall in the deepening twilight of a late autumn evening and did not look at one another. The National Alliance of Railroads was an organization formed, it was claimed, to protect the welfare of the railroad industry. This was to be achieved by developing methods of co-operation for a common purpose; this was to be achieved by the pledge of every member to subordinate his own interests to those of a the industry as a whole; the interests of the industry as a whole were to be determined by a majority vote, and every member was committed to abide by any decision the majority chose to make...
It was said that while the public welfare was threatened by shortages of transportation, railroads were destroying one another through vicious competition, on "the brutal policy of dog-eat-dog." While there existed blighted areas where rail service had been discontinued, there existed at the same time large regions where two or more railroads were competing for a traffic barely sufficient for one. It was said that there were great opportunities for younger railroads in the blighted areas. While it was true that such areas offered little economic incentive at present, a public-spirited railroad, it was said, would undertake to provide transportation for the struggling inhabitants, since the prime purpose of a railroad was public service, not profit.
Then it was said that large, established railroad systems were essential to the public welfare; and that the collapse of one of them would be a national catastrophe; and that if one such system had happened to sustain a crushing loss in a public-spirited attempt to contribute to international good will, it was entitled to public support to help it survive the blow...
Anti-dog-eat-dog Rule was described as a measure of "voluntary self-regulation" intended "the better to enforce" the laws long since passed by the country's Legislature. The Rule provided that the members of the National Alliance of Railroads were forbidden to engage in practices defined as "destructive competition"; that in regions declared to be restricted, no more than one railroad would be permitted to operate; that in such regions, seniority belonged to the oldest railroad now operating there, and that the newcomers, who had encroached unfairly upon its territory, would suspend operations within nine months after being so ordered; that the Executive Board of the National Alliance of Railroads was empowered to decide, at its sole discretion, which regions were to be restricted.

Rand understands her opponents better than they understand her. They want to use the force of the State to pick their champions in business. She wants competition to be free and voluntary. It is that simple.

Ruger claims that there is a "danger of bigness and monopoly", while overlooking the biggest monopoly known to man. The Westphalian nation-State. Monopolies are theoretically possible in a free market. If a producer were to peacefully persuade people to trade at such an unbeatable price or quality that no other competitors could count themselves as suitors to the service of consumers. This has never happened. Not once. Not to say that it cannot, but that the odds are astronomic. If this positive monopoly were to arise, then this producer would deserve to be celebrated by bards. Every actual monopoly has come about by the State's invasions into the market economy. Either by securing a sector for a specific interest group, or by securing a sector for itself. Antitrust laws pick winners and losers. The winners are the special interest groups that are granted a monopoly backed by the threat of theft, kidnapping, or murder. The losers are the consumers. Everyone.

Ruger's most alarming advocacy comes near the end of his piece

Zingales nicely explains how some policies that are not efficient from a strict economic standpoint may nonetheless be good because of their political consequences. For example, measures reducing the power and concentration of firms, especially in finance, may not make the most economic sense. Yet they may be optimal for non-economic reasons. It is refreshing to see an economist who appreciates that narrow economic efficiency should not be the only or most important criterion of public policy.

Economic efficiency is the extent to which the producer is able to meet the demand of the consumer. Antitrust laws reduce the extent to which the producer is able to meet the demand of the consumer. Antitrust laws are economically inefficient. Political consequences are vague in this context, and Ruger does not elaborate further. Chopping down the power of corporations via the State is in fact the means that Franz Oppenheimer spoke of not too kindly, the political means. Robbery. There is however, one firm who's power and concentration I would love to slash until it became less than a quark. A firm who's reduction would lead to an increase in competition. A firm that claims to protect property, but that cannot exist without forcibly taking property from humans. A firm that is the living embodiment of destruction. The nemesis of all humans. History's most wicked war criminal. The State.

Post Sciptum:

slavery is forced labor, the State is funded by stealing the fruits of labor, the State is a slave master, kill the slave master and "set the captives free"

There is a full fledged dialectic response to Ruger's charges of robotic single focus. On top of the economic arguments are the natural rights arguments, scriptural arguments, and music kritiks.

the results of actual anti-dog-eat-dog legislation here, here, here, here, here, and here.