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Gather around boys and girls it's cartoon time
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2015 Feb 20, 1:30pm 37,623 views 124 comments
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Dan8267
2015 Feb 20, 4:28pm
The worst kind of lie is a half-truth.
The video indigenous posted demonstrates this principle impeccably. Let's examine the falsehoods buried under the truth.
Edgar would prefer to pay his workers a tiny fraction of their current wages to keep more money for himself, but he knows that wouldn't work. Edgar is in competition with many other business owners. They all need a steady supply of human labor.
It is true that Edgar would prefer to pay his workers as little as possible. It is not true that Edgar is in competition with many other businesses for their labor. The number of jobs in our modern economy is far fewer than the number of job seekers. Nor is the quality of the jobs equal to the maximum potential of the labor. As a result there is less demand for labor than there is a supply. This results in labor having a poor bargaining position even when labor is highly productive.
If Edgar's offers aren't attractive enough, workers won't sell him the labor he needs to run his factory. So reluctantly Edgar ends up paying market prices for the labor he buys.
The truth is that Edgar pays market prices for labor, but there are many falsehoods here.
Falsehood 1: Market prices are related to worker productivity.
They are not. Capitalism rewards one and only one thing, bargaining power. A person's productivity, how much wealth he creates in a given hour, is utterly irrelevant. You can literally create ten million dollars of wealth in an hour, say by inventing something spectacular, and yet only get minimum wage for your wealth production if you are in a bad bargaining position. Edgar pays his employees the least he can get away with and that has nothing to do with how much wealth they produce; it only has to do with how much bargaining power they have, which as we've seen above is very little.
Falsehood 2: Market prices are determined by a free market.
They are not. Edgar and other owners of large resources such as companies, mines, land, mineral rights, etc. largely determine the market prices by manipulating law, economic and trade policies, property rights, abstract rights, and anything else they can influence through what is basically a system of open bribery of senators and other politicians.
A free market is, by definition, a market free from the manipulation of any party including the Edgars of the world. The word "free" modifies the word "market", not the word "player". In a free market, it is the market that is free, not the players. Greedy Edgars always deliberately misuse the term free market to mean a market rigged by players free from the constraint of law and that kind of market isn't free at all.
Falsehood 3: People will only work for Edgar if his offer is attractive to them.
We already know that people will work for Edgar for wages that are only a fraction of the wealth they produce. And yes, that's necessary since employers must tax their employees some amount. We'll get more into how much that tax is and how much it should be later, but for now, let's be clear on one thing. Edgar isn't buying labor and workers aren't selling labor. Workers are being taxed by Edgar for the opportunity to work, which is controlled by Edgar solely because he owns the systems of production, not because Edgar is necessarily contributing anything himself.
The fact is that people will do very unpleasant things to survive if they are forced to. The owner class, through various means, does whatever is possible to lower the bargaining power of labor so that the workers, the only people who actually produce wealth, must forfeit as much of their wealth to the employer tax as possible.
By preventing the labor from having alternatives or from collectively bargaining, the owner class forces the working, wealth-producing class from retaining a sizable share of its own wealth production.
This group of concerned citizens just got a minimum wage law passed. They were appalled that miserly employers like Edgar could get away with paying so little to workers like Simon.
Actually, the group of concerned citizens were appalled that Edgar were taxing the workers at 75% of their income instead of a reasonable 10%. And yes, this is a tax paid by the wealth producers to the owners before any government taxes the worker. And this tax goes to the private enjoyment of the owner class and does not pay for any social improvements like schools, highways, defense, police, fire fighters, etc.
The upper limit on what Edgar will pay any worker is the amount of extra revenue he expects that worker's labor will create for him in a given period.
This is true, and it is a flaw in the strategy of using a minimum wage. But what's more important are the lies of omission present here. Edgar does not reveal how much his workers are producing. In fact, Edgar goes to great lengths to conceal this knowledge even illegal means. And Edgar does this precisely for the purpose of keeping the worker's bargaining power down so that he can continue to impose a higher tax on his workers.
Ironically, the Edgars of the world would be better off themselves if they were prohibited from doing this. Sure, every single Edgar is better off screwing over his own employees, but Edgar has to sell his products to other Edgar's employees, so he's better off if the other Edgars do not screw over their employees. Of course, the other Edgars do just that because they are better off doing so even though they don't want Edgar to screw over his employees.
This is called The Tragedy of the Commons, except the commoners here are the Edgars and the workers are the fields.
http://www.youtube.com/embed/4RE9PMwwaFc
The fact is that the Edgars of the world would be far better off themselves, as would the workers, if the workers are allowed to keep the lion's share of their productivity, say 80% to 90%, regardless of the worker's bargaining power. Wealth producers keeping most of their productivity encourages people to be wealth producers rather than owner-parasites and thus increases an economy's GDP. Also, wealthy workers have more money to spend on products and that increases demand which in term increases production causing The Virtuous Cycle.
The Virtuous Cycle isn't just a theoretical concept. It has been empirically been verified many times. The quintessential example is the rise of Europe after the Black Death.
Since the fall of Rome, life in Medieval Europe just got worse and worse with every generation. Life spans and the quality of life kept declining, economic productivity plummeted, and art became primitive. The Medieval economic system revolved around an owner class (barons) and a working class (peasants). The owners kept the workers barely alive and the result was centuries of stagnation and low productivity.
When the Black Death killed off a quarter to a third of the population, there were too few workers to toil all the fields. The owner class lacked the work ethic or the skill to tend their own fields and needed the peasants for labor. (Side note: the peasants don't need the owner class to own the fields!) But with too few peasants, the worker's bargaining power was strong. Despite making wage increases illegal, the owner class was forced to pay the workers higher wages.
Now at no time did the working class get wages higher than the wealth they created, but they did get to keep a much larger percentage of their wealth creation than they ever did before. The result of this is that the peasants had the ability to afford luxuries themselves. Entire industries sprang into existence. The Renaissance itself was the result of this increased bargaining power and increased wages.
In a matter of decades, Europe brought itself out of the economic and cultural hole it had been for a thousand years. The industrial revolution, the Age of Enlightenment, the founding of America, and our modern lifestyle was possible only because Medieval peasants got a raise when the Black Death forced the owner class to relinquish its grip on all the wealth. Concentrating wealth in the hands of the few is just the worst possible way to run an economy.
Economies work when every person can maximize his productivity and keep the wealth he creates. And it is the workers who are creating the wealth, not the owners.
And yes, this Virtuous Cycle still applies today.
http://www.youtube.com/embed/IFuhT2Q82jc
Also, importantly, our economy today is grossly malformed with the owner class once again having a death grip on the productivity and wealth of our nation.
http://www.youtube.com/embed/JTzMqm2TwgE
Vickie's work generates $23/hr for Edgar and her wage is $15/hr.
If we use this video's fictitious figures, that's a 35% tax. Can you imagine the outrage the owner class would have if they had to pay a 35% capital game?
I've actually calculated the average tax that Walmart imposes on its employees on another thread in which Peter Schiff was arguing that Walmart employees shouldn't get a 15% raise. It turns out that Walmart taxes its average worker 73%! Yes, that's correct, 73%. Now imagine the outrage of the owner class if a full 73% of their income from all sources was taken in taxes.
And this tax that Walmart employees, and anyone else who is employed, pays is before the government taxes you and you get nothing in return for it. No schools, no highways, no police protection, no fire protection, nothing.
But the new law is bad news for Simon. Simon's labor generates only four dollars an hour for Edgar. The nine dollar minimum wage is five dollars more than that. Edgar would be losing five dollars an hour by keeping Simon on at the new legal minimum. So Simon doesn't get a raise. Instead, he loses his job.
At this point you should be asking, "how did the narrator calculate Simon's wealth creation?". But for now, let's assume that it is accurate. (Hint: It's not, but we'll get to that and how we know so next.)
Any job that produces less wealth than it takes to merely sustain life is not worth doing. If the work you are doing is so non-productive that you can't keep yourself alive doing it, then you should be doing something else instead. Any job that is lost due to a minimum living wage is simply the free market stating that allocating any resources to that job is a waste.
Edgar is irritated. The minimum wage means that if he wants to stay in business he has to either invest in machines that do that unskilled laborers like Simon were doing or he has to move production to another country where minimum wage laws aren't a problem.
And here lies the contradiction. If Simon is so unproductive then how the hell is Edgar's business so dependent on the work done by Simon? If that is unimportant work with low value then Edgar isn't losing anything by not having it done. Hell, Edgar should be able to do the damn work himself if it's critical for the business yet so easy anyone can do it.
The only way for Edgar to be in a pinch is if Simon was producing a hell of a lot more than $4/hour and that figure was simply a lie to keep Simon's share of his wealth production obscenely low. Think about it. The narrator openly states that Simon is doing the same level of wealth production as the design and creation of an army of robots.
Edgar believes that both of these options are less profitable for him than employing local workers. Otherwise he wouldn't have hired Simon.
In reality, businesses simply didn't have the opportunity to automate or outsource jobs until recently. If they had this ability back in the 1800s, they would have gladly done so. As new opportunities to exploit people are created, owners will take advantage of these means. As old ways to exploit people are made illegal as slavery and child labor were, owners will be forced to give a bigger share of a worker's production back to him. After all, the only alternative is for the owner to do the actual work and that's unthinkable.
[Side note: A business owned by the person doing the actual work, say a photographer, is not an example of the owner class. Rather, it is an example of the worker fully owning his own labor and therefore not having to sacrifice any of his wealth production to a parasite.]
This is why the minimum wage has been described as removing the bottom rungs from the ladder.
It is true that minimum wages kill jobs less productive than the minimum wage. However, the minimum wage in the United States is not even a living wage, so the only jobs killed are ones insufficient to keep a person alive.
But what a minimum wage also does is place a maximum level on how much an owner can screw over his employees. Since the vast majority of jobs in the economy do produce more than what it takes to merely live to the next day, a living minimum wage places a lower limit on how impoverished the owners can make the wealth producers. And that's a good thing.
Even more so, strong unions provide workers with greater bargaining power and thus higher wages. And higher wages means more consumer spending, more demand, more productivity, more business profits, more demand for labor, and thus higher wages still.
When we see social interactions that seem unfair, one response is to demand that the behavior we disapprove of be outlawed.
Examples of this include making it illegal to rape, murder, and rob. Do we really want to remove those regulations?
Some people suspect that prohibiting voluntary exchange often does more harm than good. They believe the proper function of law is to discourage the initiation of force and that we shouldn't create barriers that prevent people from doing their best to peacefully improve their lives.
And there lies the rub. There are many kinds of force. Pointing a gun at a person's head is not the only way to coerce a person. The 99% of Americans are coerced every single day by the economic policies handed to our so-called representatives by corporations. We are forced to accept a greatly diminished quality of life, financial security, and economic freedom because a few powerful owners are allowed to write the rules of the system for their own benefit at the expense of ours. Make no mistake; this is not a voluntary system.
What actually enables people from doing their best to peacefully improve their lives are high taxes on the obscenely wealth to pay for schools, infrastructure, and social safety nets that allow the poor and middle class to learn skills and to reject low-paying jobs thus forcing the owners to submit to the Virtuous Cycle.
The minimum wage is a lousy mechanism for alleviating the economic injustices of capitalism, but having nothing in its place is a hell of a lot worse. The better solution, however, is to separate ownership or management of a business from the control over the distribution of the business's revenue. There is no logical reason to marry control over the money pot to ownership.
A better system would automate the distribution of revenue to employees, owners, managers, and stock holders based on The Law of Equalization of Net Income as described in The Journal of Theoretical Biology, Volume 147, Issue 3, Pages 329-344 in an article entitled Evolutionarily stable stalk to spore ratio in cellular slime molds and the law of equalization in net incomes as well as Matt Ridley's wonderful book, The Red Queen: Sex and the Evolution of Human Nature.
I'll have to paraphrase here since this subject is so esoteric that even a Google search of "law of equalization of net income" yields zero results. It just happens that human evolution is one of my areas of interest, so I read a lot about these kinds of things.
Basically, there's this species of slime mold. Under normal conditions the slime mold exists as a loose colony of individual clones. There may be 100 clones of C1, 253 clones of C2, 57 clones of C3, etc. Reproduction is done asexually. Each cell may want to cooperate with its clones since they have identical genes, but not-so-much with other clone classes because they are competitors.
However, if conditions become bad, say food is scarce or the temperature is too high, the independent cells of all clone classes with join together and form a multicellular slug-like creature that can travel a short distance. If that slug finds a good spot, the individual cells will split and become a colony of mold cells again.
But if the slug does not find a good spot, more drastic measures are needed. The slug becomes a plant-like thing with a stalk rooted in the environment and a ball of spores held by the upper end of the stalk. The ball of spores will be released in the air to travel a great distance and colonize some other, hopefully better, area. The stalk will die and the cells inside it will have made the ultimate sacrifice to ensure the survival of the cells in the spore ball.
Naturally, no cell would want to be in the stalk. That's an evolutionary dead end. But some do go in the stalk so that others of the same clone class will get to be in the spore ball. The question is how to decide which cells go into the stalk and which into the spores. More precisely, since every cell is a member of a group of identical clones (C1, C2, C3, ...), the question is how to decide what percent of the spore ball is composed of C1 clones, of C2 clones, of C3 clones, etc. It turns out that the species of slime mold figured out an optimal solution to this problem called the Law of Equalization of Net Income. Well, the scientists studying the problem call it that. I don't know what the slime mold calls it.
The basic idea of the Law of Equalization of Net Incomes is that every participant, in this case classes of clones, will equally benefit from the cooperative task. This allows maximum cooperation and ultimately maximizes the long-term benefit of all clone classes, and thus all genes.
Now image an economic system based on that idea. It would be exponentially more stable and more productive than capitalism. There would be no need for an owner class as every wealth producer (worker) would own his own wealth production. Yes, as a software developer, I would have to give some of my wealth production to the janitor who empties my trash can, but I'm willing to do so because I produce and keep more wealth by writing code than I do by empting my trash can myself, but I still need that work done.
Under such a system, business relationships become symbiotic rather than parasitic. Every person in the economy is motivated to maximize his own productivity rather than wasting time trying to siphon productivity and wealth from others. It no longer pays to play zero-sum games as the real wealth is in the positive-sum games.
Of course, there is a downside to the Edgars in the world. They have to get off their fat, lazy asses and actually do something productive like the rest of us.
MisdemeanorRebel
2015 Feb 20, 5:05pm
Edgar pays his employees the least he can get away with and that has nothing to do with how much wealth they produce; it only has to do with how much bargaining power they have, which as we've seen above is very little.
WORD.
Edgar pays his employees the least he can get away with and that has nothing to do with how much wealth they produce; it only has to do with how much bargaining power they have, which as we've seen above is very little.
WORD.
That's why it would be an even greater tragedy if government bureaucrats (also individuals just like Edgar) were allowed to control and monopolize any segment of the market.
The workers can only get a fair shake if there are multiple potential employees competing against each other for the worker. Government bureaucrats running make-belief job sites are monopolies by definition and can not possibly give the worker a fair shake in the long run. Fiat money Central Banking flooding the market place with fake money (votes) diluting real money (real votes) only serve to enhance the bargaining power of those with personal connection to the money printers at the expense of those who do not. That is at the core of decline in living standards among the vast majority of the population in the past 40+ years.
Strategist
2015 Feb 20, 6:59pm
Gather around boys and girls it's cartoon time
You're wasting your time. I'm the only damn liberal who gets "it"
The Longshoremen get $150,000, but their employer only makes $50,000 profit from them. Because these scum are in a position to strangle the economy, they can't be fired. The employer passes on these costs to the importers, who in turn pass in on to us. :(
indigenous
2015 Feb 20, 7:14pm
Dan if you write another book I will not respond, it takes too long to read your blather.
As to falsehood one, of course the wages are supply and demand. But the China and Japan have rigged the game by devaluing their currency. And the US has let them get away with it through the floating exchange rate.
There is also the factor of comparative advantage which is what takes the per capita GDP from 500 per year to 7500 per year in China, a similiar history in Japan.
This has allowed Americans to buy more crap for less money.
Falsehood two, the alternative would be a socialist state such as the USSR, N Korea, or East Germany.
Falsehood three, no they can leave the country as with Mexico, China, Canada. IOW they vote with their feet.
The tragedy of the commons is irrelevant to minimum wage. The solution is quite well defined by John Locke.
I've actually calculated the average tax that Walmart imposes on its employees on another thread in which Peter Schiff was arguing that Walmart employees shouldn't get a 15% raise. It turns out that Walmart taxes its average worker 73%! Yes, that's correct, 73%. Now imagine the outrage of the owner class if a full 73% of their income from all sources was taken in taxes.
How the fuck did you come up with that number? OTOH just other day you mutts were going on about how the tax rate was not 50% but that has no connection to Walmart.
The inequality is simply because of the Fed creating inflation and the rich investing ahead of the inflation.
The inequality is simply the difference between the Edgars and the minimum wage earners. But the bottom line is that the minimum wage earners have a better standard of living than most of the rest of the world.
The only reason that the standard of living improves is because of comparative advantage. What kills it is the iron fist used by government.
indigenous
2015 Feb 20, 7:20pm
The workers can only get a fair shake if there are multiple potential employees competing against each other for the worker. Government bureaucrats running make-belief job sites are monopolies by definition and can not possibly give the worker a fair shake in the long run. Fiat money Central Banking flooding the market place with fake money (votes) diluting real money (real votes) only serve to enhance the bargaining power of those with personal connection to the money printers at the expense of those who do not. That is at the core of decline in living standards among the vast majority of the population in the past 40+ years.
Sactly, I forgot to mention that monopolys ONLY exist through government.
Strategist
2015 Feb 20, 7:20pm
Dan if you write another book I will not respond, it takes too long to read your blather.
When I saw how long his response was, I skipped to the next comment. It's not my bed time yet.
Dan, you need to post quality, not quantity.
MisdemeanorRebel
2015 Feb 20, 8:00pm
Has anybody noticed the Austrians aren't exactly Johnny-on-the-spot with evidence, statistical or otherwise?
All they have is "Logic" which flows from bullshit propositions which have little to no empirical support.
I'm not surprised Woods Jr., Hans Herman-Hoppe, and the rest of the gang love medieval scholasticism and hate evidence based reasoning.
indigenous
2015 Feb 20, 8:29pm
Has anybody noticed the Austrians aren't exactly Johnny-on-the-spot with evidence, statistical or otherwise?
As opposed to graphs that indicate what ever the poster deems them to mean. E.G. Bill who is the most prodigious of the graph posters yet has 80 people on ignore.
All they have is "Logic" which flows from bullshit propositions which have little to no empirical support.
The bullshit propositions are called praxelogy and by definition are self evident.
I'm not surprised Woods Jr., Hans Herman-Hoppe, and the rest of the gang love medieval scholasticism and hate evidence based reasoning.
I find them to be as pragmatic in their examples as any scientist or engineer.
tatupu70
2015 Feb 21, 6:43am
Any "data and facts" purporting to prove the Acton quote wrong can only be described as missing a forest for a leaf. Most tyrannies in world history probably started off with some "data and facts" to prove that they were "good for the people." LOL.
So, in other words. Data and facts are misleading, so people just need to trust what you say?
You're getting very close to indigenous territory.
tatupu70
2015 Feb 21, 7:09am
I do make citations when the thesis is not presumed to be common sense to a person with a moderate knowledge base. I do not need to cite anything to prove the sun rises in the east to an observer on planet earth, or 1+1=2.
It's amazing how many times something that you presume to be common sense is proven to be incorrect. You obviously possess very little common sense and would be much better off looking at facts and data as they would show you how distorted your views are.
I do make citations when the thesis is not presumed to be common sense to a person with a moderate knowledge base. I do not need to cite anything to prove the sun rises in the east to an observer on planet earth, or 1+1=2.
It's amazing how many times something that you presume to be common sense is proven to be incorrect. You obviously possess very little common sense and would be much better off looking at facts and data as they would show you how distorted your views are.
So you are making blind statements again without data to back you up. LOL. Please don't mistake me for the guy in your mirror.
Tenpoundbass
2015 Feb 21, 7:55am
Woah is me, I have to work a shitty paying job, or live on a shitty monthly welfare stipend.
It's OK everybody the Liberals are here to cajole you into appreciating Liberal wake.
indigenous
2015 Feb 21, 8:14am
But what good posters do is provide their argument and then support it with data.
To which neither of you are good posters then?
What you do is a kicked in the head version of the Socratic method.
MisdemeanorRebel
2015 Feb 21, 9:05am
What in God's Green Acres does Money Velocity have to do with debating whether productivity or bargaining power as the key to rising wages?
MisdemeanorRebel
2015 Feb 21, 9:14am
Has anybody noticed the Austrians aren't exactly Johnny-on-the-spot with evidence, statistical or otherwise?
As opposed to graphs that indicate what ever the poster deems them to mean. E.G. Bill who is the most prodigious of the graph posters yet has 80 people on ignore.
Answered this above. Now I see you just threw it out there. My graphs were relevant, yours were not. When you have facts, pound the facts, when you have the law, pound the law, when all you have is ideology, pound the table.
All they have is "Logic" which flows from bullshit propositions which have little to no empirical support.
The bullshit propositions are called praxelogy and by definition are self evident.
Rubbish. Austrians have a long history of failed predictions based on Prax. This is because their premises are flawed, and they fail to modify their theory with reality.
Where is that hyperinflation that inevitably was supposed to come years, nay, decades ago?
Other inevitable shit sourced from couch-based reasoning that didn't happen: Comets bringing the Aliens to save the World, the Return of Jesus, the "Superpredators" of the 90s (crime rate instead nosedived), and Perfect Utopian Communism and the Dictatorship of the Proletariat.
Austrians have been beating the drum for hyperinflation since not just 2000, or 2008, but from at least the late 70s. It's always "Just around the corner". Eventually, we WILL get hyperinflation at some point in the next century or so - but since a broken clock is right twice a day, this does not erase decades of wolf crying and the failure of Prax.
I find them to be as pragmatic in their examples as any scientist or engineer.
I take it you mean in their 'logical' argumentation, not in their ability to point to any evidence that what they say is true, or coming true.
indigenous
2015 Feb 21, 9:21am
What in God's Green Acres does Money Velocity have to do with debating whether productivity or bargaining power as the key to rising wages?
"God's Green Acres" you don't hear that phrase often.
As to the other:
INVESTOPEDIA EXPLAINS 'VELOCITY OF MONEY'
Velocity is important for measuring the rate at which money in circulation is used for purchasing goods and services. This helps investors gauge how robust the economy is, and is a key input in the determination of an economy's inflation calculation. Economies that exhibit a higher velocity of money relative to others tend to be further along in the business cycle and should have a higher rate of inflation, all things held constant.
Which means we really haven't experienced much of a recovery.
MisdemeanorRebel
2015 Feb 21, 9:24am
Considering the simple rebuttal of foundational equation "Supply == Demand" with basic calculus (the concept of Limit, and Zeno Paradox on flying arrow), it should be quite clear that Austrians are actually better at math than the "second rate mathematicians" that become Keynesian econometricians.
With respect, you don't know what you're talking about:
Austrians explicitly reject empiricism and mathematics. von Mises fills page after page on the subject in Human Action (which I've read).
Austrians are considered by most economists - even "heterodox" ones - to be jokes. The only Austrians in Academia are those who are there by Private Sponsored Chairs (ie some rich dude likes Austrianism, so requires the University to make a seat for them in the Department as a condition of other donations - that's how BOTH Rothboard and Herman-Hoppe, both at UNLV, were employed). The last time Austrians produced anything considered valuable by Economists in general was some business cycle stuff back a century ago. Note, Hayek is a Neoclassicalist, not an Austrian.
indigenous
2015 Feb 21, 9:47am
My graphs were relevant, yours were not.
I wasn't referring to your graphs, as I state Bill's graphs. Your graphs indicate the symptom but not the cause.
Where is that hyperinflation that inevitably was supposed to come years, nay, decades ago?
Been covered ad nauseum.
Austrians have been beating the drum for hyperinflation since not just 2000, or 2008, but from at least the late 70s. It's always "Just around the corner". Eventually, we WILL get hyperinflation at some point in the next century or so - but since a broken clock is right twice a day, this does not erase decades of wolf crying and the failure of Prax.
Inflation will be coming, but not hyperinflation as this always involves war, but maybe. Austrians generally don't espouse to the when part.
You act as though economics is a controlled experiment, it is not and there are many factors that influence the economy at any one time.
The whole western world is going to have to re-balance because of a century of fractional banking, debt, and demographic problems.
MisdemeanorRebel
2015 Feb 21, 9:52am
The Difference between Prax and the Scientific Method
Prax: Too Math Heavy; collection and plotting of data is Empirical Nonsense, especially if it disagrees with my a priori reasoning based prediction.
Scientific Method: No likely Relationship, no likely Correlation. However, research should be repeated and the methodology scrutinized carefully.
Prax: Too Math Heavy, collection and plotting of data is Empirical Nonsense, especially if it disagrees with my a priori reasoning based prediction.
Scientific Method: Strong potential relationship, likely a Correlation. However, research should be repeated and the methodology scrutinized carefully.
indigenous
2015 Feb 21, 9:56am
So once again you would like to dismiss mathematics as it too is a priori...
MisdemeanorRebel
2015 Feb 21, 11:42am
LOL, in other words you are endorsing Praxeology:
Nope. Prax solely relies on couch-based a priori reasoning. Empiricism need not apply.
1. Correlation does not equate to Causation;
Correlation does not necessarily equate to Causation, but where there is smoke, there is usually fire. Correlation leading to Causality is the heart of many, if not most, basic Science Theories. "Gee, isn't it odd that this moldy green stew has overtaken all the Staph bacteria I had in this petri dish. Naaah, just a coincidence. I won't bother exploring if there's a connection - I'll just dump this Penicillium rubens moldy mush down the sink."
What you mean to say is that Correlation doesn't imply causation. But it's a great place to start.
2. Many social and human behavioral phenomena are not isolatable or repeatable, therefore the method applied to repeatable hard sciences do not necessarily apply to social phenomena. Your need for additional research/reasoning despite strong correlation is in essence resorting to a priori reasoning.
However, accumulating and comparing data is still superior to couch-based a priori reasoning. Especially when the predicted outcome of that couch based reasoning consistently fails to materialize - like hyper-inflation.
Refusal to measure generally because many measurements aren't perfect (even though many are damn good) is a dumb idea.
BTW, it's utter nonsense to call Austrians weak at math
They may or may not be weak at it - but they despise it's use.
Without Mathematics, Statistical Correlation (however flawed), or any Empiricism, how do you Falsify Austrianism?
And that, of course, if why Austrians don't like all three.
MisdemeanorRebel
2015 Feb 21, 11:43am
So once again you would like to dismiss mathematics as it too is a priori...
Is Euclidian Geometry a priori? How about non-Euclidian Geometry? Math just "is" - a priori or not.
(oh, and some things derived from Mathematical a priori reasoning don't exist in reality, like perfect circles)
MisdemeanorRebel
2015 Feb 21, 12:09pm
Correlation and Causality, Feh!
What they're not showing is the number of people who died from Guillain Barre syndrome! How do they know that it's really the increase in driving due to the increased number of Automobiles that prevents Polio? Conspiracy! Bad Measurement!
Nope. Prax solely relies on couch-based a priori reasoning. Empiricism need not apply.
Nope, you are only proving your own ignorance of what Praxeology is. Before Mises and his Praxeology, the study of economics was divided into two distinct fields: that of Micro Economics (which is based on individual rational decision making), and that of Macro Economics (which is based on (spurious) statistics). Praxeology is an effort at unifying the two separate areas of economic studies. What's becoming increasingly clear over time is that much of the so-called "Macro Economic" "rules" are little more than transient phenomena before people fully apply their rationality to changed circumstances.
2. Many social and human behavioral phenomena are not isolatable or repeatable, therefore the method applied to repeatable hard sciences do not necessarily apply to social phenomena. Your need for additional research/reasoning despite strong correlation is in essence resorting to a priori reasoning.
However, accumulating and comparing data is still superior to couch-based a priori reasoning. Especially when the predicted outcome of that couch based reasoning consistently fails to materialize - like hyper-inflation.
You are out of your mind if you think hyper-inflation can be predicted with any regularity based on any current theory. That cuts to the very basis of why Praxeology is correct on soft social phenomena: soft social phenomena are about human responses, often based on personal experience and knowledge of the observer and the reaction-taker, therefore the very knowledge itself would change the outcome, rendering predictions based on previous data incorrect. It's the same problem faced by algorithms predicting derivative risks. Like I said, fools like yourself believing in that predictability are just bad at math modelling.
Refusal to measure generally because many measurements aren't perfect (even though many are damn good) is a dumb idea
Austrians do not refuse to measure, but they recognize the boundary failures in the math models, therefore have much less faith in the math models and conclusions from the math models, unlike the second-rate mathematicians who populate Keynesian econometrics.
Correlation does not necessarily equate to Causation, but where there is smoke, there is usually fire. Correlation leading to Causality is the heart of many, if not most, basic Science Theories. "Gee, isn't it odd that this moldy green stew has overtaken all the Staph bacteria I had in this petri dish. Naaah, just a coincidence. I won't bother exploring if there's a connection - I'll just dump this Penicillium rubens moldy mush down the sink."
So you believe fire truck showing up at a house is the cause for house burning down?
Social phenomena are not hard science like Physics, Chemistry, Biology, and to a lesser degree Medicine. Social phenomena are result of human responses and usually not isolatable (worse than even medicine). Knowledge itself affect human responses. Personally, I believe many social phenomena require much more powerful mathematical tools to abstract than we currently have in math. It's just like Quantum Uncertainty required much more complicated math than that which had powered classical physics previously; likewise, Newton and Leibnitz had to invent Calculus to describe / abstract even classical physics a couple hundred years earlier. The idea that silly pre-calculus can adequately describe and abstract complicated and probablistic social phenomena like economics only goes to show the Keynesians like yourself are very bad mathematicians and bad scientists.
MisdemeanorRebel
2015 Feb 21, 12:52pm
Nope, you are only proving your own ignorance of what Praxeology is
Back at you. You are confusing Neoclassical Economics with Austrianism.
Hayek Said in Individualism and Economic Order (Page 73 if you're arsed to check):
(Economic Theory) can never be verified or falsified by reference to facts. All that we can and must verify is the presence of our assumptions in the particular case
Let me repeat that shit: can never be verified or falsified by reference to facts. That isn't the fucking scientific method, in the hard OR soft sciences. It's proof by (deductive) logic. It's Scholasticism. It's no surprise that many Austrians worship Thomas Aquinas.
Here's some more quotes:
Praxeology is the study of those aspects of human action that can be grasped a priori; in other words, it is concerned with the conceptual analysis and logical implications of preference, choice, means-end schemes, and so forth.
http://praxeology.net/praxeo.htm
ROTHBARD:
While the praxeological method is, to say the least, out of fashion in contemporary economics as well as in social science generally and in the philosophy of science, it was the basic method of the earlier Austrian School and also of a considerable segment of the older classical school, in particular of J.B. Say and Nassau W. Senior.[2]Praxeology rests on the fundamental axiom that individual human beings act, that is, on the primordial fact that individuals engage in conscious actions toward chosen goals. This concept of action contrasts to purely reflexive, or knee-jerk, behavior, which is not directed toward goals. The praxeological method spins out by verbal deduction the logical implications of that primordial fact. In short, praxeological economics is the structure of logical implications of the fact that individuals act.
https://mises.org/library/praxeology-methodology-austrian-economics
Before Mises and his Praxeology, the study of economics was divided into two distinct fields: that of Micro Economics (which is based on individual rational decision making), and that of Macro Economics (which is based on (spurious) statistics). Praxeology is an effort at unifying the two separate areas of economic studies. What's becoming increasingly clear over time is that much of the so-called "Macro Economic" "rules" are little more than transient phenomena before people fully apply their rationality to changed circumstances.
Funny, I still see Intro to Micro and Intro to Macro courses taught in any university or college catalog I've ever looked at.
Why have Austrians been unable, with their flawless logic, to convince even a sizable minority of economists to adopt to any of their Praxeological ideas?
Why do Economists reject Austrianism? Why are Austrian-authored texts not found in fundamental econ classes? Conspiracy?
You are out of your mind if you think hyper-inflation can be predicted with any regularity based on any theory
Then why do all the Austrians keep predicting it as an inevitable outcome of government (period, since Austrianism is an anarchist viewpoint)?
That cuts to the very basis of why Praxeology is correct on soft social phenomena: soft social phenomena is about human responses, often based on personal experience and knowledge, therefore the very knowledge itself would change the outcome, rendering predictions based on previous data incorrect. It's the same problem faced by algorithms predicting derivative risks. Like I said, fools like yourself believing in that predictability are just bad at math modelling.
Explain how praxeology is correct on this "Soft Social Phenomena". Examples please - examples that no other school of economics (or related fields) - could make.
Hmmm, can't make real world predictions. Won't measure much of anything. Insist their ideas are true based on "self-evident" premises.
Color me skeptical.
Correlation doesn't imply causation. In this case, however, we've got reverse causality - the fire truck showed up because the house was burning down. But the fire truck and burning house ARE correlated, no?
Fire Trucks don't often pull up to non-burning houses, and non-burning houses seldom attract fire trucks, right?
Correlation is a great first step in establishing causation.
Fire Trucks usually pull up to non-burning houses due to all kinds of other "emergencies."
Your analysis is essentially application of a priori reasoning.
And yet, the real world experience shows in the 25-30 years since WW2, with a massively expanding government, most of the world (not just the USA) that embarked on government expansion experienced the longest, largest boom in living standards for the average person in world history, without parallel.
And indeed, Keynesian policies immediately reduced unemployment, increased outputs, etc. during the Great Depression the moment after adoption. Whereas deflationary money policies and laissez-faire "Purge the Rottenness out of the System by widespread unmitigated bankruptcies" of 1929-1932 failed to do jack shit, except possibly make it worse.
You are out of your mind if you think Keynes himself would endorse post-WWII expansion of government. Your writing goes to show that the bastardized Keynesians don't even understand what Keynesianism is. Government had to be expanded during war time in order to execute the war. Post-war period would have entailed the contraction of government, as Keynes' own involvement at Bretten Wood restablishing gold standard (however tenuous that was) showed.
Also, what made the post-WWII economic prosperity possible had little to do with expansion of government. The Truman administration shrank government. The West German government went even further unleashing the free market place.
1929-32 Hoover administration did not ""Purge the Rottenness out of the System by widespread unmitigated bankruptcies" like Mellon advised, and like Harding administration actually did in 1921-22 in the post-WWI contraction. What Hoover actually did was forming all sorts of government committees in an attempt to hold up price levels and prevent the market from clearing.
All Keynes introduced was simply a sleight-of-hand: reducing wages by debasing currency, not actually not reducing wages. LOL. Of course, once in practice, those in control of money printing found a handy tool in handing out money to their friends!
Nope, you are only proving your own ignorance of what Praxeology is
Back at you. You are confusing Neoclassical Economics with Austrianism.
Hayek Said in Individualism and Economic Order (Page 73 if you're arsed to check):
(Economic Theory) can never be verified or falsified by reference to facts. All that we can and must verify is the presence of our assumptions in the particular caseLet me repeat that shit: can never be verified or falsified by reference to facts. That isn't the fucking scientific method, in the hard OR soft sciences. It's proof by (deductive) logic
I'm not confusing anything. "Scientific Method" as applied to hard sciences indeed does not apply to the "soft sciences, " which are not science at all, due to non-isolatability and non-repeatability.
MisdemeanorRebel
2015 Feb 21, 2:04pm
Fire Trucks usually pull up to non-burning houses due to all kinds of other "emergencies."
Your analysis is essentially application of a priori reasoning.
You can test this in the real world. Set fire to houses and see if the FD shows up. Monitor a whole neighborhood for a time and see how many times the FD shows up in the absence of burning homes.
Oh, and it won't be perfect, but you'll find that Fire Trucks and burning homes are closely correlated.
How do I test Austrian a priori premises and "discourse"?
You are out of your mind if you think Keynes himself would endorse post-WWII expansion of government. Your writing goes to show that the bastardized Keynesians don't even understand what Keynesianism is.
Keynes called for spending in a Recession, tightening going into a boom. What he thought of the post-war expansion of prosperity we don't know, because he died in 1946.
1929-32 Hoover administration did not ""Purge the Rottenness out of the System by widespread unmitigated bankruptcies" like Mellon advised, and like Harding administration actually did in 1921-22 in the post-WWI contraction. What Hoover actually did was forming all sorts of government committees in an attempt to hold up price levels and prevent the market from clearing.
It did nothing. As has been mentioned on this forum before - perhaps it was directed at Indigenous and not you - that those government-industry committees of Hoover were totally voluntary with no power to compel behavior. Hoover did nothing to prevent bank failures.
Before Mises and his Praxeology, the study of economics was divided into two distinct fields: that of Micro Economics (which is based on individual rational decision making), and that of Macro Economics (which is based on (spurious) statistics). Praxeology is an effort at unifying the two separate areas of economic studies. What's becoming increasingly clear over time is that much of the so-called "Macro Economic" "rules" are little more than transient phenomena before people fully apply their rationality to changed circumstances.
Funny, I still see Intro to Micro and Intro to Macro courses taught in any university or college catalog I've ever looked at.
As you can see, without Praxeology, the two "separate" fields cause cognitive dissonance.
Why have Austrians been unable, with their flawless logic, to convince even a sizable minority of economists to adopt to any of their Praxeological ideas?
Why do Economists reject Austrianism? Why are Austrian-authored texts not found in fundamental econ classes? Conspiracy?
No conspiracy necessary: economists do not reject Austrianism per se. However, those want to take jobs at the FED and get paid well there tend not to embrace Austrianism. It's the same reason why those comrades who wanted to have a political career in the former USSR tended to study Marxism instead of other schools of philosophy or economics.
You are out of your mind if you think hyper-inflation can be predicted with any regularity based on any theory
Then why do all the Austrians keep predicting it as an inevitable outcome of government (period, since Austrianism is an anarchist viewpoint)?
Inevitable does not mean at any specific time. Otherwise, it would not be "inevitable" in timing. LOL.
Explain how praxeology is correct on this "Soft Social Phenomena". Examples please - examples that no other school of economics (or related fields) - could make.
Hmmm, can't make real world predictions. Won't measure much of anything. Insist their ideas are true based on "self-evident" premises.
Color me skeptical.
You are acting like the people who vehemently rejected Quantum Uncertainty nearly a century ago. Human social responses are not predictable for the simple reason that you are not smarter than everyone else combined and therefore unable to model the entirety of their possible thoughts and reactions. More people with knowledge like yours or mine may well affect the outcome of their choices. Observer having impact on the observed phenomenon!
MisdemeanorRebel
2015 Feb 21, 2:11pm
I'm not confusing anything. "Scientific Method" as applied to hard sciences indeed does not apply to the "soft sciences, " which are not science at all, due to non-isolatability and non-repeatability.
With respect, I call bullcrap.
From "Prax Girl", 30 second mark:
https://www.youtube.com/watch?v=QqGqx6fBts0
On the "Science" of Prax:
Unlike the sciences of chemistry or physics, when approaching human beings, praxeology has to employ a method of acquiring knowledge that does not rely on observation, but on discursive reasoning. Or we may say, logical deduction.
Right. No scientific method used in Psychology, never heard of any experiments used in that field.
circa 1:22:
The starting point of praxeology is the undeniable truth itself and a very easy one to remember: human action is purposeful behavior. It is from this undeniable fact that all of praxeology, as a science, is deduced. This fact, or axiom, is undeniable because, as we stated before, if you try to deny that human action is purposeful, you would be acting purposeful yourself.
Wow. Do these descriptions sound like science to you? "Our methodology is perfect, based on discourse with our perfect assumptions ("axioms"), and by denying it you only prove it right?"
I won't even nitpick this statement like "Is gagging when being waterboarded a purposeful behavior?"
That sounds like Medieval Theology.
MisdemeanorRebel
2015 Feb 21, 2:20pm
No conspiracy necessary: economists do not reject Austrianism per se. However, those want to take jobs at the FED and get paid well there tend not to embrace Austrianism. It's the same reason why those comrades who wanted to have a political career in the former USSR tended to study Marxism instead of other schools of philosophy or economics.
How about academia? How about real business? How come there are only a pitiful number of Austrians outside of privately-funded Think Tanks?
Inevitable does not mean at any specific time. Otherwise, it would not be "inevitable" in timing. LOL.
So you agree with Marx about inevitable Communist Revolution? He didn't say when, just like the Austrians!
Of course Rothbard, Schiff, et al have implied hyperinflation is right around the corner, and did so for years and years.
You are acting like the people who vehemently rejected Quantum Uncertainty nearly a century ago. Human social responses are not predictable for the simple reason that you are not smarter than everyone else combined and therefore unable to model the entirety of their possible thoughts and reactions. More people with knowledge like yours or mine may well affect the outcome of their choices. Observer having impact on the observed phenomenon!
Praxeology claims that human action is logical, universal, and self-interested. And therefore, conclusions can be drawn from it. And can't those conclusions can be used to make predictions, which come true?
Observation doesn't always interfere with the observed. Sometimes the observer impacts the observed phenomenon to an extant it changes the result. It's not really true that a watched pot doesn't boil, nor that my watching it effects when it boils.
Keynes called for spending in a Recession, tightening going into a boom. What he thought of the post-war expansion of prosperity we don't know, because he died in 1946
Utter nonsense. We already knew what Keynes was doing in preparation for the end of WWII: Bretton Wood and gradual return to gold standard. Your utter failure at guessing what Keynes would have done in post-WWII goes to show that you don't even understand Keynesianism. What you have is a bastardized what-ever -ism that is anathema to anyone with a clue about economics.
With respect, I call bullcrap.
That's because you are full of bull crap. Not surprising coming from a worshipper of a soviet butcher.
Right. No scientific method used in Psychology, never heard of any experiments used in that field.
In case it is not obvious, Psychology is quite unlike hard science: its industrial practice is based on "consensus" in the book called "Diagnostic Statistical Manual." When was the last time you saw Physics explained like that? LOL.
Economics is even "softer" than Psychology: it would be like applying DSM on fellow Psychiatrists because every economist is a participant in the economy itself.
Wow. Do these descriptions sound like science to you?
What's the surprise here? Economics is not a science, in the sense of hard science. Predicting human behavior is just like predicting stock futures: your pronounced prediction and its reaching audience may well affect the performance of the stock itself.
Praxeology claims that human action is logical, universal, and self-interested. And therefore, conclusions can be drawn from it. And can't those conclusions can be used to make predictions, which come true?
No. Value are subjective, and limited by one's imperfect knowledge as well influenced by one's emotional state.
You guys however hold yourselves out as seers; how come you have been unable to make infallible predictions?
Observation doesn't always interfere with the observed. Sometimes the observer impacts the observed phenomenon to an extant it changes the result. It's not really true that a watched pot doesn't boil, nor that my watching it effects when it boils.
You are full of shit as usual. Read up on observation effect. It has nothing to do with pot of war or the pot that you are smoking. Try front run whatever stock you have the inside dib on, and see the result of your front-running.
indigenous
2015 Feb 21, 5:28pm
So once again you would like to dismiss mathematics as it too is a priori...
Is Euclidian Geometry a priori? How about non-Euclidian Geometry? Math just "is" - a priori or not.
(oh, and some things derived from Mathematical a priori reasoning don't exist in reality, like perfect circles)
"A Priori Knowledge
A Priori is a philosophical term that is used in several different ways. The term is suppose to mean knowledge that is gained through deduction, and not through empirical evidence. For instance, if I have two apples now, and I plan to add three apples, I will have five apples. This is knowledge gained deductively. I did not actually need to get the three other apples and place them with the first two to see that I have five. To this extent, the term A Priori is valid.
The problem, though, is that the word is used to describe something entirely different. It is used to describe knowledge that exists without reference to reality. One example is inborn knowledge. Another example often used is mathematics. To understand why this second definition, which is how the term is really used, is flawed, we have to look at exactly what is being said and meant.
Let's look at mathematics. It's easy to see, in the apple example above, that mathematics fits under first, valid meaning of the term. If this were all that was meant by saying that mathematics is a priori, there would be no problem. However, this isn't it. Philosophers then go on to say that mathematics is true without reference to reality. The knowledge of mathematics (as opposed to the knowledge created by mathematics) is a priori. It is known without reference to reality. It is claimed that mathematics is a higher form of knowledge. That even if the world around us doesn't exist, mathematics is still true. That it is a form of knowledge that we can be certain of, even if we deny reality.
How do they make such a statement? First, they see that mathematics is the science of units, and any units are acceptable. I could have said trucks instead of apples above. The validity would be the same. It is true without reference to any unit.
This sounds okay at first. The problem stems from the method of deriving the mathematical abstractions. Teach a child to do simple arithmetic, and you'll recognize that to gain the knowledge of math, one must use some units. Maybe apples. Maybe oranges. It doesn't matter which units. It does matter, though, that some unit is picked. To grasp math, one needs a foundation. Particulars from which an abstraction can be made.
Calling mathematics a priori, or knowledge independent of reality, is to undercut its base. This is the essence of the second meaning of a priori. The meaning that is actually used. An abstraction is made from particulars. Once the abstraction is made, the process from which it was derived is then ignored. The base on which it was built is denied. The abstract knowledge is then said to exist without reference to reality, since the reference is ignored.
In this way, certain kinds of knowledge are said to exist without being dependent on reality. Various explanations for how we are aware of the knowledge are put forward. Some say it is inborn, and we were always aware of it. Others say that although it was inborn, it takes awhile for us to recognize the knowledge. Others decide that it is revelation from some higher power.
The consequences to accepting the claim that knowledge can be a priori is that it leads to faith. When it is suppose that some knowledge exists and is valid without our need of deriving it from reality, it opens the door to pretending all knowledge can be like this. By denying the use of reason to form these abstract ideas, it claims there are alternative methods of gaining knowledge. By severing the tie to reality, it allows any idea to be accepted."
http://www.importanceofphilosophy.com/Irrational_APriori.html
Lips before you blather on, that does not say that praxelogy is severing any ties to reality.
Dan8267
2015 Feb 21, 6:19pm
The workers can only get a fair shake if there are multiple potential employees competing against each other for the worker.
Actually, that's not true. The solution I proposed does not require government or the owner to control the distribution of revenue from a business.
Also, under our current system there are not multiple potential employers competing for workers. There are few employers and they have a multitude of unfair advantages that make the worker have essentially zero bargaining power. And that is exactly the problem. A worker's compensation should be determined entirely by his productivity not his bargaining power.
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