Discussion of the Austrian School

[TakeAStepBack]

Explain comparative advantage and free trade assumption as then. SHOW it. Do the work. I'm not going to do it for you if that's what you're waiting for. I'll hang back now and ask again for you to break down these obvious flaws and contradictions.

Thanks.

 

[jwoodie]

I have considered the Austrian Model to be prescriptive rather than predictive.

 

[Kimura]

Explain comparative advantage and free trade assumption as then. SHOW it. Do the work. I'm not going to do it for you if that's what you're waiting for. I'll hang back now and ask again for you to break down these obvious flaws and contradictions.

Thanks.

I’d like to preface this by stating that the human action axiom is a pretty nutty observation that can be made anyone, such as Keynesians, Monetarists, Chartalists, Marxists, et al. You can include any school of economcs, but we'll still deduce nothing from it without some other premise. Any deductive argument requires more than one premise to infer anything whatsoever.

I’m glad we got that out of the way……the finality of it all.

First of all, von Mises’ praxeological argument for free trade is heavily dependent on David Ricardo. He makes a correct assessment that David Ricardo made certain assumptions for comparative to operate in a proper fashion. von Mises wrote Human Action back in 1949, way before we had capital markets and globalization, which started in the early 1970s.

We had a world of capital controls, constrained labor markets, restricted foreign investment, etc. Even von Mises admitted that the Ricardian worldview was no longer applicable.

von Mises missed the boat when it came to assumptions about comparative advantage. It’s not even practical to assume where his argument about comparative advantage will even work from a time period of about 1940-1975. We have to analyze both the hidden and implicit assumptions.

David Ricardo’s recipe for comparative advantage must have the following conditions:

A) That production, such as labor and capital goods aren’t mobile on an international level.
B) Workers are inherently fungible – they can be shifted around to sector’s of the economy where a county can locate and secure comparative advantage.

Once we have a situation where capital is mobile, where it can move around in an international level, comparative advantage breaks down, leaving us with absolute advantage. Welcome to the world of 1972-1975-ish to present day globalization.

In point of fact, both the Austrian and Neoclassical argument about free trade is based on capital of county staying in said country, thus being allocated to another domestic industry where one can gain comparative advantage. In the modern era, this isn’t the case, we have capital in the Western counties sourcing absolute advantage in the Third Word or developing countries. This type of movement of massive amounts of capital is a recipe for deindustrialization in the Western counties, as capital will inevitably will end up in places with the absolute lowest unit labor costs, which results in falling wages and increased unemployment in the Western countries, etc.

Let’s assume the aforementioned statements are true and correct, we still have these hidden assumptions intrinsically linked to the arguments presented by von Mises and David Ricardo. These hidden assumptions are the cornerstone of various synthetic propositions which are the very foundation of praxeology.

 

[TakeAStepBack]

Oh boy...

OK, let me think about your post for a while to formulate the proper response. But once again, you're basing Mises premise off fiat money and monetary controls as they are in today's world. That was one of Mises, Rothbards, etc main points regarding Austrian view. That these authority mechanisms lead to disruption of capital markets. It becomes impossible to implicate Mises theories on economics under todays fiat systems.

"Currency" under todays system, far exceeds true wealth creation. This is what leads to such drastic mobility and what you call "absolute advantage". When govt.s control labor, currency, capital, etc..the results are what we see. There was globalization back then too. Plenty of international trade and mobility. Plenty.

But again, you're trying to wrap Mises into todays oppressive interventions into markets, when his entire arguments were against such controls. Moving him and others, to begin to point out the results of such interventions and controls, along with advocating economic liberty.

72 was the beginning of a floating reserve currency and the results since have been absolutely disasterous. As many point out. I'll try to see if I can unravel the pretzel you've created around portions of Mises theories while simultaneous ignoring others and then pointing to current fiat disasters as why Mises is outdated. I woudnt say outdated, I'd say not popular. Not popular in government (for obvious reasons), who is the entity creating the disasterous controls for their own benefits.

 

[EdwardBaiamonte]

by far-right cranks like the Koch Brothers, etc.

Actually they believe in capitalism. East/West Germany, Cuba/Florida. Did you hear that China just switched to capitalism and instantly eliminated 40% of world poverty? Does that tell you that the Koch brothers, Jefferson, Locke, and Friedman are right or wrong?

 

[Rshermr]

by far-right cranks like the Koch Brothers, etc.

Actually they believe in capitalism. East/West Germany, Cuba/Florida. Did you hear that China just switched to capitalism and instantly eliminated 40% of world poverty? Does that tell you that the Koch brothers, Jefferson, Locke, and Friedman are right or wrong?

The Koch brothers got their fortune from their father, Fred, who was one of the founders of The John Birch Society. And Fred was a business partner with Stalin.
You like the koch brothers??? I thought you disliked Stalin.
Filmmaker Robert Greenwald Tells Truthout How the Koch Brothers Endanger Democracy and Our Health

Back to the meds, ed.

 

[oldfart]

At the core, economics is a model of certain types of human behavior, the creation and distribution of wealth. Humans are individually quirky, but in large numbers become more predictable in a statistical sense. On a continuum this makes economics the hardest of the social sciences and somewhat less precise than the softest of the hard sciences (to what extent is weather and climate a hard science?). This argues for a need for more tools that mathematical models, not for the avoidance of such models.

The core conceit of economic central planers....The belief that because a lot -or even a majority- of people have done something in the past they'll do it again, despite the context of the times and the fact that humans are quirky, capricious and sometimes tempestuous.....The notion that you really can in fact push a rope.

Your argument is that social sciences do not exist. Since you seem not bothered that this is a counterfactual, then it logically follows that all of those hard-headed business types that spend good hard money on consumer research, political polling, and,yes, economic forecasting are wasting their money on a delusion.

I find it hard to believe that you truly feel that no human behavior is sufficiently predictable in an aggregate behavior to make it useful to apply statistical modeling.

 

[Oddball]

At the core, economics is a model of certain types of human behavior, the creation and distribution of wealth. Humans are individually quirky, but in large numbers become more predictable in a statistical sense. On a continuum this makes economics the hardest of the social sciences and somewhat less precise than the softest of the hard sciences (to what extent is weather and climate a hard science?). This argues for a need for more tools that mathematical models, not for the avoidance of such models.

The core conceit of economic central planers....The belief that because a lot -or even a majority- of people have done something in the past they'll do it again, despite the context of the times and the fact that humans are quirky, capricious and sometimes tempestuous.....The notion that you really can in fact push a rope.

Your argument is that social sciences do not exist. Since you seem not bothered that this is a counterfactual, then it logically follows that all of those hard-headed business types that spend good hard money on consumer research, political polling, and,yes, economic forecasting are wasting their money on a delusion.

I find it hard to believe that you truly feel that no human behavior is sufficiently predictable in an aggregate behavior to make it useful to apply statistical modeling.

"Social sciences" are less scientific than race track odds making.

Aside form the emotional component -which makes predictors of human behavior worse than the weather, which cannot be accurately forecast beyond a couple of days- when the research and subsequent decisions of business types don't pan out, it's only their money that is on the line and potentially lost.

This is vastly different from economic central planners, who will put political investments and calculations ahead of the financial risks/benefits...Of course, we're also supposed to presume that the emotions of the central planners just get put on hold, and that each and every one of their predictions and "investments" contain no emotional components whatsoever.

 

[EdwardBaiamonte]

by far-right cranks like the Koch Brothers, etc.

Actually they believe in capitalism. East/West Germany, Cuba/Florida. Did you hear that China just switched to capitalism and instantly eliminated 40% of world poverty? Does that tell you that the Koch brothers, Jefferson, Locke, and Friedman are right or wrong?

The Koch brothers got their fortune from their father, Fred, who was one of the founders of The John Birch Society. And Fred was a business partner with Stalin.
You like the koch brothers??? I thought you disliked Stalin.
Filmmaker Robert Greenwald Tells Truthout How the Koch Brothers Endanger Democracy and Our Health

Back to the meds, ed.

so please state a substantive position of the Koch brothers and then tell us why it is mistaken or admit once again as a liberal that you lack the IQ for substance

 

[Kimura]

Oh boy...

OK, let me think about your post for a while to formulate the proper response. But once again, you're basing Mises premise off fiat money and monetary controls as they are in today's world. That was one of Mises, Rothbards, etc main points regarding Austrian view. That these authority mechanisms lead to disruption of capital markets. It becomes impossible to implicate Mises theories on economics under todays fiat systems.

I pointed out how his assumptions about free trade and comparative advantage were flawed, regardless if we were on a fixed exchange rate or floating exchange rate or using tally sticks. There's more problems with von Mises and Praxeology, I can get into detail if need be. The flawed and erroneous Austrian theory about inflation comes to mind, but that's been done to death.

"Currency" under todays system, far exceeds true wealth creation. This is what leads to such drastic mobility and what you call "absolute advantage". When govt.s control labor, currency, capital, etc..the results are what we see. There was globalization back then too. Plenty of international trade and mobility. Plenty.

Markets don't self-regulate, nor to they magically reach equilibrium. History - and reality - tells us a different story.

But again, you're trying to wrap Mises into todays oppressive interventions into markets, when his entire arguments were against such controls. Moving him and others, to begin to point out the results of such interventions and controls, along with advocating economic liberty.

Define "oppressive interventions into markets"?

72 was the beginning of a floating reserve currency and the results since have been absolutely disasterous. As many point out. I'll try to see if I can unravel the pretzel you've created around portions of Mises theories while simultaneous ignoring others and then pointing to current fiat disasters as why Mises is outdated. I woudnt say outdated, I'd say not popular. Not popular in government (for obvious reasons), who is the entity creating the disasterous controls for their own benefits.

We're much better of under a fiat system than the gold standard, unless you prefer panics and depressions every decade. Our fiat system is far superior, we can manage inflation and deflation in a way better fashion. If we followed the Austrian approach, we would have a deflationary crash and burn, coupled with a massive culling of our population. Purging malinvestments they call it, lol. And for what? The worship of some mythical free market which doesn't exist in the first place. The name of the game is political economy in today's world.

 

[Oddball]

Markets don't self-regulate, nor to they magically reach equilibrium. History - and reality - tells us a different story.

Like I said earlier...You had best get the Nobel Committee on the horn and have them revoke Vernon Smith's 2002 prize...Seems that they're under the impression that his work with experimental economics did in fact prove those very things.

 

[Kimura]

Markets don't self-regulate, nor to they magically reach equilibrium. History - and reality - tells us a different story.

Like I said earlier...You had best get the Nobel Committee on the horn and have them revoke Vernon Smith's 2002 prize...Seems that they're under the impression that his work with experimental economics did in fact prove those very things.

What's with the appeal to authority? I know who Vernon Smith is and I'm familiar with his research which is largely based around the microeconomic side of things if I'm not mistaken.

 

[Oddball]

Sorry I don't have the time and finances handy on my own to recreate the honorary Dr. Smith's research and provide them to you first hand.

I imagine my repetition of E=mc², without setting off a nuclear bomb, would also be such an appeal to authority, huh?

 

[william the wie]

At the core, economics is a model of certain types of human behavior, the creation and distribution of wealth. Humans are individually quirky, but in large numbers become more predictable in a statistical sense. On a continuum this makes economics the hardest of the social sciences and somewhat less precise than the softest of the hard sciences (to what extent is weather and climate a hard science?). This argues for a need for more tools that mathematical models, not for the avoidance of such models.

The core conceit of economic central planers....The belief that because a lot -or even a majority- of people have done something in the past they'll do it again, despite the context of the times and the fact that humans are quirky, capricious and sometimes tempestuous.....The notion that you really can in fact push a rope.

Your argument is that social sciences do not exist. Since you seem not bothered that this is a counterfactual, then it logically follows that all of those hard-headed business types that spend good hard money on consumer research, political polling, and,yes, economic forecasting are wasting their money on a delusion.

I find it hard to believe that you truly feel that no human behavior is sufficiently predictable in an aggregate behavior to make it useful to apply statistical modeling.

OK,

Accounting debits and credits are a way of avoiding the use of negative numbers.

So by not showing accounting changes as positive and negative numbers on one level accounting avoids dealing with imaginary and complex numbers, much less state changes.

But that doesn't mean those states and transformations don't happen just that they are not shown in accounting statements.

Other than Minsky and Arthur who is addressing this issue?

 

[Kimura]

Sorry I don't have the time and finances handy on my own to recreate the honorary Dr. Smith's research and provide them to you first hand.

I imagine my repetition of E=mc², without setting off a nuclear bomb, would also be such an appeal to authority, huh?

You're seriously comparing physics to experimental and behavioral economics? Okie dokie.

 

[Oddball]

Sorry I don't have the time and finances handy on my own to recreate the honorary Dr. Smith's research and provide them to you first hand.

I imagine my repetition of E=mc², without setting off a nuclear bomb, would also be such an appeal to authority, huh?

You're seriously comparing physics to experimental and behavioral economics? Okie dokie.

No, I'm calling out your lame attempt at the invocation of appeal to authority.

 

[oldfart]

bump!

 

[EdwardBaiamonte]

Oh boy...

OK, let me think about your post for a while to formulate the proper response. But once again, you're basing Mises premise off fiat money and monetary controls as they are in today's world. That was one of Mises, Rothbards, etc main points regarding Austrian view. That these authority mechanisms lead to disruption of capital markets. It becomes impossible to implicate Mises theories on economics under todays fiat systems.

I pointed out how his assumptions about free trade and comparative advantage were flawed, regardless if we were on a fixed exchange rate or floating exchange rate or using tally sticks. There's more problems with von Mises and Praxeology, I can get into detail if need be. The flawed and erroneous Austrian theory about inflation comes to mind, but that's been done to death.

"Currency" under todays system, far exceeds true wealth creation. This is what leads to such drastic mobility and what you call "absolute advantage". When govt.s control labor, currency, capital, etc..the results are what we see. There was globalization back then too. Plenty of international trade and mobility. Plenty.

Markets don't self-regulate, nor to they magically reach equilibrium. History - and reality - tells us a different story.

But again, you're trying to wrap Mises into todays oppressive interventions into markets, when his entire arguments were against such controls. Moving him and others, to begin to point out the results of such interventions and controls, along with advocating economic liberty.

Define "oppressive interventions into markets"?

72 was the beginning of a floating reserve currency and the results since have been absolutely disasterous. As many point out. I'll try to see if I can unravel the pretzel you've created around portions of Mises theories while simultaneous ignoring others and then pointing to current fiat disasters as why Mises is outdated. I woudnt say outdated, I'd say not popular. Not popular in government (for obvious reasons), who is the entity creating the disasterous controls for their own benefits.

We're much better of under a fiat system than the gold standard, unless you prefer panics and depressions every decade. Our fiat system is far superior, we can manage inflation and deflation in a way better fashion. If we followed the Austrian approach, we would have a deflationary crash and burn, coupled with a massive culling of our population. Purging malinvestments they call it, lol. And for what? The worship of some mythical free market which doesn't exist in the first place. The name of the game is political economy in today's world.

fiat system better? Impossible since it puts the economy in hands of a tiny few. This is anti American. In past neither worked well because macro economics was misunderstood. Today both can work well but gold is safer and more American. Bernanke says he manages fiat system as if it was a gold system so that at least provides some comfort as to overall direction and objectives.

 

[EdwardBaiamonte]

by far-right cranks like the Koch Brothers, etc.

Actually they believe in capitalism. East/West Germany, Cuba/Florida. Did you hear that China just switched to capitalism and instantly eliminated 40% of world poverty? Does that tell you that the Koch brothers, Jefferson, Locke, and Friedman are right or wrong?

The Koch brothers got their fortune from their father, Fred, who was one of the founders of The John Birch Society. And Fred was a business partner with Stalin.
You like the koch brothers??? I thought you disliked Stalin.
Filmmaker Robert Greenwald Tells Truthout How the Koch Brothers Endanger Democracy and Our Health

Back to the meds, ed.

you win $1 billion for being billionth person on internet to use that insult and think it was very clever!!

Actually the Koch brothers believe in capitalism. East/West Germany, Cuba/Florida. Did you hear that China just switched to capitalism and instantly eliminated 40% of world poverty? Does that tell you that the Koch brothers, Jefferson, Locke, and Friedman are right or wrong?

 

[ScienceRocks]

Mexico follows it. Pays slave wages.

promotes niggerdom!