Milton Friedman

"Niets dat waar is in Milton Friedman, is nieuw. Niets dat nieuw* is in Milton Friedman, is waar."

Iemand die het tegendeel kan beargumenteren?

*met betrekking tot economische theorie.

Roderick Long zijn filosofie seminarie

In 2006 gaf Roderik Long een filosofie seminarie in het Mises Institute. Hij heeft dit nu op zijn eigen website gezet. Het hoeft niet gezegd te worden dat dit natuurlijk een absolute must-watch/listen is voor iedereen - zeker zij die claimen geïnteresseerd te zijn in de filosofische onderbouwing van het (klassiek-)liberalisme.

Van zijn eigen aankondiging:

On the one hand, the subjective-value approach to economics characteristic of the Austrian school might seem inhospitable to objective theories of ethical value. Yet on the other hand, philosophers like Socrates, Aristotle, and Aquinas based their objective conceptions of ethics on something rather like a praxeological analysis of subjective valuation; indeed, subjectivist economics and natural law ethics both originated from this common tradition. Can an objective ethics in a broadly Aristotelian tradition be grounded in praxeological considerations? And if so, what shape might a radical libertarian political theory take if built on such foundations?

The first half of the seminar will deal with the praxeological foundations of ethics. Topics include: do human beings have an ultimate end? can we knowingly choose the bad? how are morality and self-interest related? why should we care about other people’s interests? ...

The second half of the seminar will explore the implications of praxeological, Aristotelean ethics for such issues as property rights, contracts, land ownership, punishment and restitution, military policy, stateless legal systems, utilitarian vs. rights-based considerations, and the cultural preconditions of liberty.

Prelude: Economics and Its Ethical Assumptions: [text] [2005 audio] [2007 audio] [2009 audio] [[2010 audio]

I. From Praxeology to Ethics

1. Objective and Subjective Value: [audio] [video]

2. The Praxeological Case for an Ultimate End: [audio] [video]

3. Free Will: Two Paradoxes of Choice: [audio] [video]

4. The Moral Standpoint: [audio] [video]

5. An Aristotelean Ethics of Virtue: [audio] [video]

II. From Ethics to Liberty

6. Justice, Rights, and Consequences: [audio] [video]

7. Property, Land, Contract: [audio] [video]

8. Punishment and War: [audio] [video]

9. Culture and Liberty: [audio] [video]

10. An Anarchist Legal Order: [audio] [video]

A Case for a Free Market of Ideas and Traditions

In de USA heb ik een weekje gelogeerd bij 2 aangename jonge dames. Ik heb hiervoor al gelinked naar het debat waaraan Liya deelnam.

Hieronder is haar follow up tekst; waarbij ze het (conservatieve) idee bekritiseert dat de overheid bepaalde tradities moet bewaken.

Ik kan alleen maar zeggen dat ik de tekst grandioos vind.

(Originele bron: hier. Check ook de Students For Liberty Website in zijn geheel!)

A Case for a Free Market of Ideas and Traditions

Posted on August 12, 2010 by Liya Palagashvili

Three weeks ago, I had the opportunity to represent the libertarian perspective in the Libertarianism v Conservatism debate at the Cato Institute. I had originally written a speech supporting libertarianism through an economic point of view, but as the debate developed into specific policy issues, I did not have a chance to present my speech. I’ve decided to make the content of the speech into this blog post.

While Alexander McCobin’s post last week focused on the differences between conservatives and libertarians, my post will attempt to show free market advocates why we should hold a political philosophy closer to libertarianism than conservatism. Additionally, I will attempt to adopt Megan McArdle’s embracive approach by reaching out to conservatives who truly understand the fundamentals of how the free market works. McArdle’s post entitled “Oregon’s Rich Talk is Not a Victory for Liberals,” demonstrates the method of persuasion that I hope to mimic.

Coming from an economics background, I have come to appreciate the free market and the economic liberties it provides. But the real question is, why do I support social liberties as well? Or, more broadly, why should free market advocates support a libertarian political philosophy rather than a conservative political philosophy?

Before I begin, it is important to distinguish that I am referring to conservatism as apolitical philosophy, not as a personal philosophy. That is, a political philosophy aims to answer the question of what is the proper role of the government. While I may be more conservative leaning in my personal philosophies, I do not believe that conservatism is a proper political philosophy. To quote F.A Hayek, “There are many values of the conservative which appeal to me more than those of the socialists; yet for a [classical] liberal the importance he personally attaches to specific goals is no sufficient justification for forcing others to serve them.”

I am a free market advocate because I understand why the market works and I understand how the market is better able to channel human nature to meet the demands of individuals. Free market advocates know that no one person has 100 percent knowledge or certainty, that knowledge is local and dispersed, and that orders emerge spontaneously, i.e. what we call “spontaneous order” or the “invisible hand.” We know, for example, that no central authority could determine the quantity, color, style, and size shoe each person wants at a given moment in time. Most conservatives would agree that having the government take over the shoe industry would be disastrous.

But why should the government take over the industry of ideas and traditions? If you truly understand how and why the free market works, you know that government officials cannot possibly also have perfect knowledge of the “good” and “bad” traditions in society. That is, in the free market of goods and services, if a product is not valued, the market takes care of it; it disappears – it’s no longer sold, and resources are not wasted to make this product. There need not be a decree from government officials. The same dynamic is at play in the market of ideas and traditions. The only effective mechanism of determining which traditions are “good” and which traditions are “bad” is by allowing them to freely evolve and either prosper or disappear.

By legislating, regulating, and mandating traditions, the government is attempting to artificially preserve those traditions. Most conservatives and libertarians are against the bailouts because they understand that conserving for the sake of conserving leads to bad, unwanted outcomes for all of society. For example, we know that if no one values the work of GM, the markets will allow them to disappear so resources can be used toward more valued ends; a “good” outcome. In the realm of traditions, there is no way of knowing which traditions are good and which traditions are bad if politicians artificially preserve the traditions they claim to have absolute certainty of being good traditions

If the conservative traditions are valuable, they will naturally stay in society. There would be no reason for the government to artificially preserve them. The institution of marriage and the family has persisted in all cultures for millennia, not due to some government policy, but due to the value that people derive from them. Meanwhile, institutions that have not produced sustained value to individuals, such as primogeniture, have disappeared, and rightly so. If we trust the free market of goods and services to lead to the best outcomes, we should also trust the free market of ideas and traditions to do the same. Believing in the free market of one, but not in the free market of the other only demonstrates a scant knowledge of how and why the free market works. Acknowledging that we lack perfect information in one aspect and not the other would be hypocritical of a free market advocate. This is also Hayek’s main criticism of conservatives, stating that they “lack [an] understanding of economic forces…and lack the faith in the spontaneous forces of adjustment.”

However, Hayek’s knowledge problem is not the only reason why free market advocates should be libertarians. Free market advocates should already understand and apply the important implications of public choice theory to government. Government bureaucracies created for running the welfare state are the very same government bureaucracies created for running the war on drugs. They do not fundamentally differ. Nobel Laureate James Buchanan criticized the view that when men enter into politics, they become angels. We all understand why that is false today. But why would free market advocates claim that when men run a certain government program they are not angels, but when they run another government program they are angels?

This view should be rejected by all those who understand the forces of economics, public choice, and the free market. Those who advocate regulating social issues, no matter how well-intentioned, inevitably fall into the same traps of bureaucratic inertia and agency self-preservation that plague other government programs. These are the Bootleggers and the Baptists we all learned about in our basic economics class. The dynamic does not change when you regulate an economic issue instead of a social issue. Take for example the profit-seeking opportunities that police have chosen to exploit through civil asset forfeiture, taking the property of innocent people for their own gain by claiming that the individuals “could be drug dealers.” We would be inconsistent to say that power should not be given to government with regards to economic issues, but power should be given to the government with regards to the social issues. We ought always to be wary of how government officials will use the powers that we grant to them.

Lastly, it would be in the “free market conservatives” best interest to advocate their philosophy as a personal philosophy, not a political philosophy. Many of the conservative values are great values, but the public reacts against them because they despise the notion of conservatives using government to impose personal views on them. Conservatives who legislate such views tacitly demonstrate that they either actually don’t believe their traditions are good enough to stay naturally or that they are the only ones who are smart enough to have absolute certainty of the best traditions – both of which makes moderates and independents cringe. The support of today’s youth for progressive politicians is not an opposition to liberty, but rather an opposition of conservatives legislating their beliefs onto individuals.

For conservatives to achieve their ends they should take the opposite approach, one that does not create backlash and one that implies that conservatives have faith not only in the value of their traditions but also in the intelligence and autonomy of the public to recognize these merits and adopt these positions voluntarily. In“Conscience on the Battlefield,” Leonard Read, the founder of FEE, explains how the best actions come through voluntary education and ideology, not force—or as he puts it, “action dictated by conscience instead of by Caesars.”

If conservatives want to defend their traditions and institutions, they should condemn any attempt by the state to impose one belief structure or another. They should focus their energies on arguing for why their ideas are valuable and should be adopted voluntarily by other individuals instead of using legislation to impose their world view on others. Conservatives would have a much better chance of reaching young people if they embraced the free market of ideas and defended their traditions on their own merit.

De Oostenrijkse school in 10 Proposities

In the Concise Encyclopedia of Economics

1. Only individuals choose.
2. The study of the market order is fundamentally about exchange behavior and the institutions within which exchanges take place.
3. The “facts” of the social sciences are what people believe and think.
4. Utility and costs are subjective.
5. The price system economizes on the information that people need to process in making their decisions.
6. Private property in the means of production is a necessary condition for rational economic calculation.
7. The competitive market is a process of entrepreneurial discovery.
8. Money is nonneutral.
9. The capital structure consists of heterogeneous goods that have multispecific uses that must be aligned.
10. Social institutions often are the result of human action, but not of human design.

What Austrians Should Do?

Implications

- Battle with historicism is not 'live'

- Battle with General Competitive Equilibrium is neither 'dead' nor 'live'

- Battle with 'formalistic historicism' hasn't been engaged, but this is the world we live in

Rules of Engagement

- The Essential tension again

=> Have to accept the standards of scientific success of the game you are playing

- Competing on the margins where comparative advantage resides

=> Work in those areas that are often omitted by your scientific peers, yet are also areas that they care about

====> become a productive input into the scientific production process of others within the profession

- commitment, yet professional engagement

=> Stick to your guns about your paradigmatic points, but do so in a way that keeps you in the conversation rather then excluded from it.

Microeconomics

- Entrepreneurial theory of the market process

- Rationality and behavioral economics

Macroeconomics

- Monetary theory

- Capital theory

Political economy

- Self-governance

Remember Bastiat

- "the worst thing that can happen to a good cause is not to be skillfully attacked, but to be ineptly defended."

- Aspire to a higher and more sophisticated form economic argument, yet understand that simple economics is not necessarily simple-minded economics.

Notities bij Pete Leeson on 'Self Governance'

erste slide: "Anarchy"

Everyday anarchy

- Most of the world, for most of its history

- More than half the world's government: "weak" or 'failed'

- International arena: between governments and between citizens

- "Pockets of anarchy" in developed countries

=> Governance: some system of rules/law and means of enforcement of facilitating social order

=> Government: one sort of organization to ensure governance => Legitimized monopoly of force in a territory

=> Studying anarchist order => 'kind of a side show' <=> it actually is important for understanding (austrian) economics.

=> Even though we live in a world with many governments: most of our interactions happen in anarchic situations.

Sideshow or necessity

- Mises on Menger's theory of money: quintessentially "praexeological theory", pointed to its "import ... for the elucidation of fundamental principles of praxeology and its methods of research" (1949: 402)

- Why? Tri-part emhasis on:

=> Human Purposiveness

=> Social Cooperation

=> Institutions

- Ricardian Law of Association

3 cases

- Easy case: effective self-government in the 'state's shadow'

=> Nearly all agree that it's possible

- Hard case: effective self government outside the 'state's shadow'

=> Nearly all agree this is impossible where pops are large, diverse, or require a SE solution to violence.

- Hardest case: self governing society that generates wealth

=> Nearly all agree this is impossible.

The Easy case: self-enforcing contracts

- Used when: government contract enforcement is absent/prohibitively costly.

- Mechanism: folk theorem => Unsophisticated

- Ex. Jewish Diamond traders; how neighbors settle disputes

- Limits: infinitely-repeated play; low time preference; low-cost communication (pop size and diversity); common idea about cheating; equal strength; can't create encompassing social order

- Bottom line: indispensable, but, alone, very limited (intra-group social cooperation) => conventional wisdom correct.

The Hard Case: Large Population and Social Diversity

- Used when: government contract enforcement is absent/prohibitively costly

- Mechanism: folk theorem + signaling => Sophisticated

- Ex: Logos/signage; lex Mercatoria; precolonial Africa, gangs

- Limits: infinitely repeated play; low time-preference; equal strength; can't create encompassing social order

- Botom line: facilitates inter-group cooperation => conventional wisdom mistaken

The Hard Case: Violence

- Used when: government protection absent

- Mechanism: violence; credit; other => sophistication depends.

- Ex: American West; feud, leges marchiarum

- Limits: depends... jurisdictional conflict; out-of-equilibrium escalation; other

- Bottom line: might need not make right => conventional wisdom mistaken

Rich and stateless?

- We have examples of fully self-governing societies: medieval Iceland, pirates, tribes, Somalia, etc.

- But how rich are/were they? Existence =/= efficiency.

- True! So what can we say about self-governance efficiency?

What doesn't shed light on the Hardest Case Question?

- Every country in the world has government (almost)

=> Every country in the world has tariffs: does that prove it's efficient? => No, it proves that it is in some peoples advantage.

- (Insert stateless society) is/was very poor

=> You aren't comparing the relevant institutions

- Private Institutions can't facilitate large volumes of trade

=> It's wrong => They can. A quarter of world GDP is caused by private institutions.

- (Insert N. American, W. European country)'s government can clearly facilitate more social cooperation than (insert stateless society)'s system of private governance

=> It doesn't tell us anything: you aren't comparing relevant institutions.

What are we left with?

- Compare the 'best' anarchy with 'the best' state; but compare the 50th 'best' anarchy with the '50th' best government.

- Somalia: pre and post anarchy: almost on every indicator: somalia has improved.

1. Unqualified claims about the HCQ in either direction aren't going to be right
2. Avoid the wrong question: why aren't any privately ordered societies richer?
3. Ask the right question: compared to the relevant institutional alternative in this case: how does (might) private ordering fare?
4. Comparing relevant alternatives, it seems that in many and perhaps most cases in the world at the moment, private ordening would fare well.
5. We have much empirical and theoretical work left to do on the HCQ.
6. Public choice is essential to aswering the HCQ.
7. Studying anarchy isn't a luxury.

Notites voor Horwitz zijn 'Costs of Inflation'(

(Lecture gegeven op de fee. Zie hier zijn paper. Het spijt me voor de 2-taligheid; maar het is moeilijk om 1-talig te houden, als je tegelijkertijd zaken moet beschrijven, luisteren en de powerpoint overnemen.)

Inflatie heeft invloed op Relatieve Prijs Effecten.

- RPE is inherent aan monetary expansie, i.e. als er geldcreatie is, zijn er noodzakelijke RPE, omdat prijzen moeten aanpassen aan de nieuwe geldhoeveelheid.

• => Het gaat niet over 'interpretatieve fouten' of 'menu costs' (de kost om je menukaarten aan te passen)
• => We moeten aandacht hebben voor het institutionele proces

- Public choice reasons for RPE

• => Er zijn redenen waarom politici deze RPE willen creëren

- Irrelevantie van 'het prijslevel'

• => Producenten zijn bezig met 'de prijzen' waar ze mee geconfronteerd worden.

- Standaard view: RPE throw us out of Equilibrium

- Alternatieve view: RPEs undermine the epistemic function of prices

• => Prices guide us before the fact, rewards us after the fact. Prices have a discovery function.

- Undermines entrepreneurship and economic calculation and coordination more generally

A Comparative Institutions View of the Costs of Inflation

=> Het verschil tussen een samenleving mét en een samenleving zonder inflatie.

- GDP and the Costs of Inflation

• Inflatie is slecht => maar zou dat dan geen effect hebben op GDP? Maar een aantal van de 'kosten' van inflatie, zullen eigenlijk aan het GDP toegevoegd worden! (Broken Window Fallacy! => Als we New Orleans heropbouwen voegt dat toe aan GDP, maar we zijn niet echt rijker.) Inflatie creëert 'cooping costs', i.e. kosten die we aangaan om ons te wapenen tegen inflatie, maar dat helpt niet echt. Ze voegen toe aan GDP, maar het zou beter zijn dat we die zaken beter niet doen (i.e. we zouden beter geen inflatie hebben).
• 4 onderwerpen waar we het over gaan hebben.

1. - Costs of misallocated capital
2. - Coping Costs
3. - The Relative costs of markets and politics
4. - Inflation and social order

- Costs of misallocated capital

• Austrian Signal extraction problem => Ondernemers moeten ontdekken of de prijsveranderingen die ze zien 'echt' of 'inflatie veroorzaakt' zijn.
• => Not just real vs monetary, but the path! => Het pad dat het geld gebruikt om zich door de economie te transfereren. (Cantillon-effects)
• Derived demand and capital allocation => We moeten weten of deze verandering (door inflatie) tijdelijk of permanent is. => Er is een grotere vraag; maar is deze tijdelijk of permanent. Door de inflatie => moeilijker te weten.
• => Irretrievable costs of refitting => Indien je het fout hebt; hogere kosten. (En grotere kans op fouten, door de inflatie.)
• => Complementary and substitutability => Als je bepaalde zaken hebt gekocht, moet je bepaalde zaken 'cutten'; geld uitgegeven dat niet voordelig is.
• => Long run non-neutrality is one result. => vs mainstream die beweren dat op de korte tijd geld neutraal is. Maar op de lange termijn is geld ook niet neutraal: door het verspillen van middelen aan kapitaalgoederen, wordt je kapitaalstructuur belemmerd.
• ===> Hercowitz on 'perfect substitutability' => 'op de lange termijn, alles is perfect substitutable'; slechte assumptie.
• => Applies to human capital also => Where is the unemployment? => jobs die geraakt zijn door de vorige boom.

- Coping Costs

• Coping costs as analogous to rent-seeking wastes
• => If you expect inflation, you will invest in the resources to avoid it. But these are wasteful; if there weren't inflation, you wouldn't invest in these resources and you would invest in resources that directly satisfy your wants. Given the inflation, it's not stupid to invest in such things. But it would be better if there were no inflation.
• Shoe-leather and menu costs
• => The general public fears inflation more than the economists.
• Contract negotiation and enforcement => You need contracts to cope with inflation rates. Renegotiation, etc.
• Accountancy issues => How do you account for inflation in checking profit and loss? => When we compare value through time; but if the 'ruler' gets screwed up (the money), it's harder. => We kunnen niet zomaar 'er is 10% inflatie' disconteren; want misschien heb jij last van 2% of 20% inflatie - want het algemeen inflatie cijfer is een gemiddelde.
• Producer and consumer asset-protection
• => Shift from production to finance => Mensen zien de effecten van inflatie en proberen zich te wapenen door in de financewereld te stappen. => Allemaal wordt toegevoegd aan GDP; maar we zijn slechter af dan het alternatief.
• => consumer portfolio shifts

- The relative costs of markets and politics

• Which path to wealth?
• Scrambled price signals => Political action => Er wordt politieke actie geëist.
• => Intervention creates beneficiaries => Sommige mensen halen voordeel uit de inflatie (bureaucraten en andere voorbeelden) en derhalve zal er achteraf minder mensen zijn die tegen de inflatie stemmen.
• The interventionist dynamic (Mises)
• The ratchet effect (Higgs)
• A generalized movement awat from markets as the primarcy allocation process

- Inflation and Social order

• Mises and the law of association
• Exchange as socializing
• Contract vs Hegemony (Mises) => Om een contract samenleving te hebben, heb je 'sound money' nodig hebben. Inflatie ondermijnt dit proces.
• Inflation undermines exchange and contract as the basis of social order
• => Despotic or democratic (hyperinflatie leidt tot Hitler)

De mainstream heeft de kosten van inflatie vaak genegeerd.