Economic Misinformation

[ParkCungHee]

A blender can be defined as an object which can use blades to slice an object (using electricity) which is within it. If it is unplugged, ti does not cease to be a blender.

Your assuming an object remains the same object despite change. You have yet to offer any evidence that this is possible.

They don't exist but people still believe in them.

People don't exist either!

An idea affecting action is not dependent on its actual existence nor clarification.

It still requires the existence of actions. You're still not getting it, I'm claiming any action that produces change is fundementally impossible and so far, you haven't even begun to approach a logical argument in defense of the possibility of change, yet you claim logic validates your claims.

 

[Death Lord]

Your assuming an object remains the same object despite change. You have yet to offer any evidence that this is possible.

Fine, then humans change into a new object when they fall asleep or into a coma, just as blenders and other devices when they are unplugged, or turned off.

People don't exist either!

It still requires the existence of actions. You're still not getting it, I'm claiming any action that produces change is fundementally impossible and so far, you haven't even begun to approach a logical argument in defense of the possibility of change, yet you claim logic validates your claims.

Look, we can hypothesize that there are things in a world in which beings who believe they can change their surroundings through actions. We can use this idea to come up with ideas on how they will act, if they exist. Empirically, they do, so we can apply those theories to this world.

 

[ParkCungHee]

Fine, then humans change into a new object when they fall asleep or into a coma, just as blenders and other devices when they are unplugged, or turned off.

Sure. Just make sure to factor that into your economic predictions, that humans rarely last more then 16 hours. Now I'm sure with a little more prodding your permanence of objects will get taken down even further.

Look, we can hypothesize that there are things in a world in which beings who believe they can change their surroundings through actions.

But you can't do so logically. So you've now abandoned logic and empiricism as tools to defend your position. And even if they believe they can change the world, you still haven't come up with how, logically, such hypothetical beings could effect changes.

 

[knez]

...

Mises and Rothbard attempted to restructure all of core price theory around preference orderings instead of utility functions; in particular, Mises and Rothbard deny the existence of indifference between bundles of goods. Aside from the rejection of indifference, there's nothing particularly wrong with Austrian micro, except that it's irrelevant. So where it's innovative, it's wrong; and where it's not innovative, it's irrelevant.

ABCT has bizarre implications for expectations. On that basis alone is ought to be discarded. There are numerous theoretical objections to it; see here, about halfway down, for an abstract. I am less familiar with empirical objections but doubtless someone else can help me out here.

My basic theoretical objection to ABCT is the same as my theoretical objection to NK business cycle theory: both rely on using the short-term interest rate as the barometer of monetary policy. That is, quite simply, untenable. Interest rates were low in the US in 1931, and high in Germany in 1923; would you argue that monetary policy loose in the US and tight in Germany? One cannot use nominal interest rates to judge the stance of monetary policy. One cannot even use real interest rates; though those are marginally better.



The best barometer of the stance of monetary policy is to look at aggregate demand (nominal GDP) relative to trend. Sliding into empirics for a bit: by that measure, monetary policy has been consistently tight since 2008, not loose.

First on the micro. Aldo I don't see much wrong with austrian micro, micro in general is boring to me and I don't have the will to go read to make you a proper reply...

Now, ABCT

weather interest rates are low or high in a period when bubble is generated is irrelevant, what is relevant is the difference between interest rates that are and those that would reflect real amounts of capital available


relevant objections from your link

Austrians along with almost all other economists accept that expansionary monetary policy tends to reduce interest rates (definitely real interest rates, and usually nominal rates as well) in the short term.[46] There is no question that this change in interest rates tends to affect the profitability of different investments; as Austrians emphasize, with lower interest rates, more "round-about" investments will become profitable. Projects with returns further in the future previously might have had a negative present discounted value; lower the interest rate, and the PDV quite possibly might become positive. Bohm-Bawerk's capital theory - focusing on the intertemporal coordination of numerous stages of production - does incline Austrians to be particularly aware of the tendency of lower interest rates to stimulate more round-about projects. But modern neoclassicals would surely also accept the claim that lower interest rates alter PDV calculations in favor of investments with more distant returns.[47]

Thus, it is readily conceded that (a) expansionary monetary policy reduces interest rates, and (b) lower interest rates stimulate investment in more round-about projects. Where then does the disagreement emerge? What I deny is that the artificially stimulated investments have any tendency to become malinvestments. Supposedly, since the central bank's inflation cannot continue indefinitely, it is eventually necessary to let interest rates rise back to the natural rate, which then reveals the underlying unprofitability of the artificially stimulated investments. The objection is simple: Given that interest rates are artificially and unsustainably low, why would any businessman make his profitability calculations based on the assumption that the low interest rates will prevail indefinitely? No, what would happen is that entrepreneurs would realize that interest rates are only temporarily low, and take this into account.
...

Why does Rothbard think businessmen are so incompetent at forecasting government policy? He credits them with entrepreneurial foresight about all market-generated conditions, but curiously finds them unable to forecast government policy, or even to avoid falling prey to simple accounting illusions generated by inflation and deflation. Even if simple businessmen just use current market interest rates in a completely robotic way, why doesn't arbitrage by the credit-market insiders make long-term interest rates a reasonable prediction of actual policies? The problem is supposed to be that businessmen just look at current interest rates, figure out the PDV of possible investments, and due to artificially low interest rates (which can't persist forever) they wind up making malinvestments. But why couldn't they just use the credit market's long-term interest rates for forecasting profitability instead of stupidly looking at current short-term rates? Particularly in interventionist economies, it would seem that natural selection would weed out businesspeople with such a gigantic blind spot. Moreover, even if most businesspeople don't understand that low interest rates are only temporary, the long-term interest rate will still be a good forecast so long as the professional interest rate speculators don't make the same mistake.

while interesting, this criticism is wrong on so many levels

1) first of all, it implies that single entrepreneur (or market for that mater) has knowledge of proper interest rate is and thus the ability to make investment decisions on it rather than on the market interest rate

2) that (artificially) lowered interest rates also boost consumption to a level higher than whatever and entrepreneur in general will also receive misleading information from other sides

3) ignores that long term interest rates are connected with short term interest rates if for no other reason than because of banks (investment funds etc.) and maturity transformation

in short, in order to prove ABCT wrong, you must prove that expectations are rational when money and price of money are concerned (or disprove they are not, whatever)
that is what I have yet to see


not really intelligent or important objections from your link

The Austrian theory also suffers from serious internal inconsistencies. If, as in the Austrian theory, initial consumption/investment preferences "re-assert themselves," why don't the consumption goods industries enjoy a huge boom during depressions? After all, if the prices of the capital goods factors are too high, are not the prices of the consumption goods factors too low? Wage workers in capital goods industries are unhappy when old time preferences re-assert themselves. But wage workers in consumer goods industries should be overjoyed. The Austrian theory predicts a decline in employment in some sectors, but an increase in others; thus, it does nothing to explain why unemployment is high during the "bust" and low during the "boom."

err, maybe because it takes time to do that
because depression is the time period in which reassertion is being done, and after it's done consumption goods industries will produce more

and whats with the workers ?????
that guy believes wages depend on the size of the industry and not on demand and supply of labor ?

 

[BuckeyeJim]

No. The point is that the extreme inequality, and more to the point, growing inequality, is disruptive to home, family, schools, neighborhoods, cities, pretty much everything. Add that to a society that thinks it's OK to shortchange the poor, and you have far more effort required for the poor to succeed than, for example, you had to. From what you have said, you've had to work very hard for the success you have had. Kudos for that. But most people richer than you never had to work near as hard, and got much more for it. And most people poorer than you would have had to work far harder, to get less.

Equal ability and equal effort don't produce equal results because the situation that these things take place in does not have equal opportunity.

So... I'm suppose to be jealous? Angry? Sad? Covetous? Envious? Bitter?

All because some kids grew up into more money and had a shinier school?

 

[Cutlass]

So... I'm suppose to be jealous? Angry? Sad? Covetous? Envious? Bitter?

All because some kids grew up into more money and had a shinier school?

No. You're supposed to not look down on people simply because they have it harder than you do.

 

[Death Lord]

Sure. Just make sure to factor that into your economic predictions, that humans rarely last more then 16 hours. Now I'm sure with a little more prodding your permanence of objects will get taken down even further.

No, they are men capable of action for 16 hours a day, just as an electric car will only work for ~2 hour slots. Also, there is an extent to which sleep is a choice, just as chopping ones hand off (thus being unable to use it to perform action) is an action which takes a while (which could thus apply to everything, as if I am swimming, I cannot drive to New York).

But you can't do so logically. So you've now abandoned logic and empiricism as tools to defend your position. And even if they believe they can change the world, you still haven't come up with how, logically, such hypothetical beings could effect changes.

Howso? If men act (which means they believe in causation and so on), then we can reach certain conclusions. If those assumptions apply to our world, then so do the conclusions. Geometry is true on a plane (something you cannot prove logically), but if you are on a plane, geometry is true.

 

[BuckeyeJim]

No. You're supposed to not look down on people simply because they have it harder than you do.

I don't. That's why I do my best to help them out. My job, my church, a bit of what little free time I have. My goal in life is to figure out ways to unlock the potential within all people through advancements in communication and presentation of information. Using divisive methods to make people: jealous, envious, angry, sad, and bitter because socio-economic differences is an unproductive route to take. I find it better if people concentrate on their own lives instead of those they perceive as foes. There no since in begrudging people for such superfluous reasons.

 

[Cutlass]

I don't. That's why I do my best to help them out. My job, my church, a bit of what little free time I have. My goal in life is to figure out ways to unlock the potential within all people through advancements in communication and presentation of information. Using divisive methods to make people: jealous, envious, angry, sad, and bitter because socio-economic differences is an unproductive route to take. I find it better if people concentrate on their own lives instead of those they perceive as foes. There no since in begrudging people for such superfluous reasons.

Ok. That's good. But I feel that, intentional or not, you have strongly given a number of people the opposite impression.

 

[BuckeyeJim]

Ok. That's good. But I feel that, intentional or not, you have strongly given a number of people the opposite impression.

Well specific part would give this opposite impression?

 

[Cutlass]

I could go back and reread all your earlier posts. Or you could. Is it worthwhile to?

 

[BuckeyeJim]

I could go back and reread all your earlier posts. Or you could. Is it worthwhile to?

It would be worthwhile for me if you would go back and reread my posts. It would then help me narrow down a potential failure in communication. Or it could just be a result of other past experiences where people are transforming what I say, into what they want to think I said, when what I said couldn't be farther from the truth. But wherever this overbearing concern you have that I look down people who had/have it harder it than me exists, I'd like to know it. Spend as much time as you need, this is important to me.

 

[ParkCungHee]

No, they are men capable of action for 16 hours a day

At which point they stop being men. So no man could possibly plan more then 16 hours in advance because that's when he ceases to be. If logic can be used to predict human actions, this should certainly hold true.

Howso? If men act (which means they believe in causation and so on), then we can reach certain conclusions.

That's if men act, something you haven't demonstrated is logically even possible. So what you are doing is taking an article of faith, not logic, and then attempting to apply it to a phenomenological reality, the fact that you can't actually grasp any argument, or respond by repeating the same statements, shows that all you have is an article of faith.

 

[Death Lord]

At which point they stop being men. So no man could possibly plan more then 16 hours in advance because that's when he ceases to be. If logic can be used to predict human actions, this should certainly hold true.

So by this logic, do you only plan to use a car for as long as it has fuel, and consider it worthless after that? No. Also, humans can only act in the present, anything after that is mere guesswork, be it the belief you will avoid a wall, your crops will grow or you will wake up in the morning. My computer has memory even after turning it off, and so do I. Also, babies may have assumed this to be true, but learned over time that sleep does not mean death.

That's if men act, something you haven't demonstrated is logically even possible. So what you are doing is taking an article of faith, not logic, and then attempting to apply it to a phenomenological reality, the fact that you can't actually grasp any argument, or respond by repeating the same statements, shows that all you have is an article of faith.

Are you saying it is logically impossible for a man to act? This is false (I could hypothesize a logically consistent world where one did), so it must be logically possible for one to act. Also, we can see through introspection or empiricism, that in this world men act, and the logic coming from that axiom holds true. Or do you deny it?

 

[ParkCungHee]

Are you saying it is logically impossible for a man to act?

Yes. I am also saying it is logically impossible for there to be such a thing as man.

This is false

Demonstrate it.

(I could hypothesize a logically consistent world where one did),

But you haven't so far. You haven't posited a logically consistent model of cause and effect.

so, we can see through introspection or empiricism, that in this world men act, and the logic coming from that axiom holds true. Or do you deny it?

I do deny it. I know that through introspection, this world is logically impossible and therefor illusory. If you're going to abandon empiricism, you're going to have to defend your metaphysics.

 

[Death Lord]

Yes. I am also saying it is logically impossible for there to be such a thing as man.

Demonstrate it.

We can hypothesize a being which derives pleasure from the process of respiration. It could act by moving to an area where (it believes) there is more sugar. This is not logically inconsistent, so the notion of a man is not logically impossible (whereas, I cannot hypothesize a 4-sided triangle, which is).

But you haven't so far. You haven't posited a logically consistent model of cause and effect.

I don't need to. Little kids cross their fingers, regardless of the actual effect it has. Only the assumption of causation is needed.

I do deny it. I know that through introspection, this world is logically impossible and therefor illusory. If you're going to abandon empiricism, you're going to have to defend your metaphysics.

I don't abandon empiricism. I make a theory on what would happen given certain pre-conditions, and then, if those pre-conditions apply to our world, so do the conclusions. And what am I or you doing here but acting?

 

[ParkCungHee]

We can hypothesize a being which derives pleasure from the process of respiration. It could act by moving to an area where (it believes) there is more sugar. This is not logically inconsistent, so the notion of a man is not logically impossible (whereas, I cannot hypothesize a 4-sided triangle, which is).

By what means does it derive pleasure form respiration. If there already exists pleasure within it, then the change brought about by respiration is illusory. If the pleasure does not already exist in it, it comes about ex nihilo.
Your hypothesis is illogical, and self-defeating.
On the other hand, I can easily logically hypothesize a 4-sided triangle, I just can't define or perceive one.

I don't need to. Little kids cross their fingers, regardless of the actual effect it has. Only the assumption of causation is needed.

So you're comparing your philosophy to children crossing their fingers.

I don't abandon empiricism. I make a theory on what would happen given certain pre-conditions, and then, if those pre-conditions apply to our world, so do the conclusions.

That is the exactly a rejection of empiricism, which would suggest that a theory must conform to empirical data. Since you refuse to root your arguments in what we experience as reality, you could turn to logic, but since you haven't been able to defend your beliefs in logic,

And what am I or you doing here but acting?

You haven't convinced me that you or I are here.

 

[Death Lord]

By what means does it derive pleasure form respiration. If there already exists pleasure within it, then the change brought about by respiration is illusory. If the pleasure does not already exist in it, it comes about ex nihilo.
Your hypothesis is illogical, and self-defeating.
On the other hand, I can easily logically hypothesize a 4-sided triangle, I just can't define or perceive one.

Well yes, all pleasures human perceive can be seen as illusory, and (theoretically) a Matrix like situation, where we artificially experience certain pleasures could exist. So the respiration causes pleasure as touching a stoves causes me to pull my hand away (via the brains signals and hormones and whatever).

So you're comparing your philosophy to children crossing their fingers.

No, I'm comparing all human action to children crossing their fingers. Both are based on (supposed) empirical truths.

That is the exactly a rejection of empiricism, which would suggest that a theory must conform to empirical data. Since you refuse to root your arguments in what we experience as reality, you could turn to logic, but since you haven't been able to defend your beliefs in logic,

I worded that badly. Basically, I root it in logic, with as few empirical truths as possible (man acts), and thus can use the logic, and apply it to our world. I was trying to say that the theories are not completely divorced from reality (as would an economic theory which assumed infinite resources), as in this world men act.

You haven't convinced me that you or I are here.

I know I exist, and you know you exist. My actions confirm my belief that I act. If you do not see yourself as acting, I cannot convince you.

 

[ParkCungHee]

So the respiration causes pleasure as touching a stoves causes me to pull my hand away (via the brains signals and hormones and whatever).

Okay, you're dense, I get it. But please actually read what I'm writing. I am not interested in a physical explanation of how the brain works. I'm already aware of that. I'm asking for an explanation, of how logically cause produces actual effect without creating the effect ex nihilo. You still haven't provided that, and so you can't get your metaphysics off the ground.

No, I'm comparing all human action to children crossing their fingers. Both are based on (supposed) empirical truths.

These so called human actions you haven't actually been able to establish the existence of.

I worded that badly. Basically, I root it in logic, with as few empirical truths as possible (man acts),

Which is odd, because the purpose of economics is to be as close to empirical truth as possible. But, if you're going to hold logic to a higher value of truth then empirical data, you must do so consistently or, vice versa. Doing otherwise is judging all truth value by the extent with which it conforms with your views.

I know I exist, and you know you exist.

No I don't, and you haven't expressed anything approaching meaningful knowledge of your own existence.

My actions confirm my belief that I act.

The only evidence you have of your actions is empirical evidence. If my logic is correct, then reality must conform to it, and your empirical evidence is wrong.

 

[Death Lord]

Okay, you're dense, I get it. But please actually read what I'm writing. I am not interested in a physical explanation of how the brain works. I'm already aware of that. I'm asking for an explanation, of how logically cause produces actual effect without creating the effect ex nihilo. You still haven't provided that, and so you can't get your metaphysics off the ground.

Cause can create effect like a series of dominoes falling over. I would understand the objection if you were questioning causation in this world , but how can you deny causation per se. An object causes a change in reality which leads to, in the next period of time, another part of reality being different. You would either have to assert pure randomness, deny change or deny time.

These so called human actions you haven't actually been able to establish the existence of.

Empirically, I act (and you probably know of the same feeling), and logically it is possible.

Which is odd, because the purpose of economics is to be as close to empirical truth as possible. But, if you're going to hold logic to a higher value of truth then empirical data, you must do so consistently or, vice versa. Doing otherwise is judging all truth value by the extent with which it conforms with your views.

According to who is that the standard? This train of reasoning holds true based on the prerequisites of logical consistency and the world being one in which man acts. It is like how theological views are correct given the existence of God.

No I don't, and you haven't expressed anything approaching meaningful knowledge of your own existence.

I cannot prove to you that I exist, but I know I exist, and you know you exist. I think therefore I am.

The only evidence you have of your actions is empirical evidence. If my logic is correct, then reality must conform to it, and your empirical evidence is wrong.

Euclidean geometry is true IF you are working on a plane (you can only know this empirically). If someone claims to have empirically found a 181 (interior)degree triangle on a plane, that is wrong.