Patterico's Pontifications

8/27/2015

“Human Action” and Robert Murphy’s “Choice,” Part 6: The Importance of Ideas and Reason

Filed under: Economics,General,Human Action and Choice — Patterico @ 12:02 am

This is Part 6 of a 17-part series of posts summarizing Bob Murphy’s indispensable book Choice: Cooperation, Enterprise, and Human Action. Murphy’s book is itself is a summary of Ludwig von Mises’s classic treatise “Human Action.” As a result, this is a summary of a summary. Blog life.

The idea here is to popularize and spread the word about Austrian economics and educate the public. (Several of you have bought Murphy’s book, and that is very pleasing to me. Some have even started reading Mises himself, which is fantastic!) Rather than list all the previous parts, I have created a category for all these posts, called “Human Action and Choice,” so that all these posts can be read (in reverse order) with a single click. Note well: any errors in these summaries are mine and not Murphy’s.

Chapter 6 is a chapter devoted to summarizing Mises’s views on the importance of ideas in history. As Keynes said, most men are “the slaves of some defunct economist.” How ironic that quote is to the Austrian economist! — who watches governments haplessly careen from one absurd Keynesian “solution” to another, always prescribing the most counterproductive “cure” imaginable to the given diagnosed economic disease. The Austrian watches countries in a “bust” try to “fix” everything with huge infusions of cash and lowering of interest rates. The Austrian sees these actions as insane — like using trepanation to cure headaches, lobotomies to cure depression, or cigarettes to cure asthma. The Austrian longs for the day when the basics of economics are widely understood by policymakers, as real human suffering will thereby be alleviated to a previously unheard-of extent.

Mises literally believed that using reason “to grasp the advantages of social cooperation” (to use Murphy’s phrase) is the key to preventing the collapse of society.

Murphy spends much of chapter 6 drawing contrasts between Mises’s Austrian economics and other economic philosophies, such as Marxism and logical positivism.

The contrast with Marxism might sound like it would require a long explanation, but for now Mises (and Murphy) are concerned mainly with showing that Marx believed society molded men’s ideas, while Mises believed that ideas molded society. Other stark differences between Austrian economics and Marxism/socialism, such as Mises’s famous explication of the “socialist calculation problem” (also discussed by Hayek) will be reserved for future posts.

Probably the most interesting contrast is that between Mises and the logical positivists asserted that statements about economics lacked value unless they could be “verified.” This contrast, to me, appears related to Murphy’s final topic of the chapter: the notion that economics cannot be a “science” unless it makes testable predictions. Although Murphy separates the sections, I will discuss them together in this post.

Here, Murphy contrasts Mises with another well-respected economist (and a Patterico favorite): Milton Friedman. It turns out that Friedman and Mises are severely at odds with one another on the notion of economics as a “science” — and whether the correctness of economic principles depends upon those principles being validated by real-world data.

At this point the reader may be uneasy. We’re taking issue with Milton Friedman and rejecting the notion of using real-world data to validate our principles? Surely we are on shaky ground here! The fact that I know you are thinking this, to me, means I need to spend a little extra time on this final point.

This reminds us of Murphy’s analogy to geometry in Chapter 3 (see post number three in this series). As I summarized it in that post:

We do not derive the Pythagorean theorem by building 500 right triangles and measuring the angles and the sides. The proof of the theorem does not depend on experimentation. The proof is within us — it is simply a logical chain of thoughts that we need to reflect on.

Murphy quotes Mises on this point in chapter 6. Mises argued that while the Pythagorean theorem could be considered a “tautology” in the sense that “its deduction results in an analytic judgment,” that does not mean it is to be discounted:

Nonetheless nobody would contend that geometry in general and the theorem of Pythagoras in particular do not enlarge our knowledge. Congition from purely deductive reasoning is also creative and opens for our mind access to previously barred spheres. . . . It is its vocation to tender manifest and obvious what was hidden and unknown before.

Mises makes an analogy here to the quantity theory of money (the cornerstone of which he elsewhere modestly defined as “the idea that a connection exists between variations in the value of money on the one hand and variations in the relations between the demand for money and the supply of it on the other hand” — Theory of Money and Credit, p. 130) and says that it is like the Pythagorean theorem:

The quantity theory does not add to our knowledge anything which is not virtually contained in the concept of money. It transforms, develops, and unfolds; it only analyzes and is therefore tautological like the theorem of Pythagoras in relation to the concept of the rectangular [right] triangle. However, nobody would deny the cognitive value of the quantity theory. To a mind not enlightened by economic reasoning it remains unknown. A long line of abortive attempts to solve the problems concerned shows that it was certainly not easy to attain the present state of knowledge.

In chapter 6, Murphy gives us a hypothetical in which aliens visit Earth. We might not expect them to already know things that are purely a matter of human convention — such as the idea that a “bachelor” is someone without a wife. But we would expect that they would know geometry. And (if they engage in specialization and trade) we would expect that they would know economic principles like marginal utility theory. And if the aliens didn’t know geometry, or economic principles, we would expect that they would be grateful to learn these things — and that they would recognize their inherent truth.

Murphy quotes Friedman as disdaining an economic theory based on “a structure of tautologies” as being nothing but “disguised mathematics” if it cannot predict action in the real world. Let me quote Murphy at length in response:

From the starting point that humans act, the economist could logically deduce — thereby forming a tautology, it’s true — that individuals have subjective preferences with ordinal rankings, that choices come with opportunity costs, and that the value of second-order capital goods is dependent on the value of the first-order consumer goods that the individual believes they have the technological power to produce. Say what one will about these types of statements, they are clearly within the realm of economics and are not merely “disguised mathematics.” Although they have not been derived by reference to empirical observation, thinking through these tautologies definitely aids acting individuals as they navigate the real world. Logical, deductive economics as championed by Ludwig von Mises is not mere word games.

That’s how Murphy ends his chapter, and it’s a good way to end this blog post. We’re about 1/3 of the way through the project so far. Keep reading and sharing!

8/26/2015

Trump: Pandering on Oreos

Filed under: General — Patterico @ 6:59 pm

He’s not a conservative:

Hotel magnate and Republican presidential candidate Donald Trump confirmed on Tuesday that he will stop eating Oreos, a decision he came to after Nabisco parent company Mondelez International, announced last month that it’s replacing production lines in Chicago with new ones at a plant in Salinas, Mexico.

“I’m never eating Oreos again,” Trump said on Tuesday, reaffirming statements he first made last week at a rally in Alabama, where he said, “Mexico is the new China . . . I love Oreos. I will never eat them again. Nabisco closes the plant in Chicago and they are moving the plant to Mexico.”

A quick fact-check: that last sentence isn’t true. Mondelez is not closing the Chicago plant, but it is cutting 600 jobs there as a result of the new investment in Mexico, the Associated Press reports.

And why would a company making a foodstuff, whose key ingredient is sugar, find it cheaper to manufacture that in Mexico?

TOTALLY UNRELATED QUESTION: Why does Mexican Coke taste so much better than Coke made in the U.S.?

OR IS IT UNRELATED AFTER ALL? If you’re familiar with the absurd ways that the U.S. Government subsidizes sugar, you’ll see these questions are related. As the Dartmouth Business Journal explains:

America’s sugar farming industry is currently one of the most protected industries in the United States. Two centuries ago, the U.S. government embarked on this protectionist trend in order to gain the loyalty of the sugarcane farmers in the Louisiana Territory. Today, the original program has evolved into a series of complicated import tariff-rate quotas (TRQs) that heavily distort the sugar market. These TRQs are combinations of quotas, limits on the amount of the good that can be imported, and tariffs, taxes on these imported goods. The TRQ used to protect the American sugar industry allows a certain amount of sugar to be imported at lower tariffs, but for all sugar exceeding this amount, tariffs rise to around 150% of the sugar’s cost. On average, Americans pay 3 times the world price for sugar. This huge price distortion is one of the largest in the U.S. and has had far-reaching negative consequences, both at home and abroad.

One of the things this policy does, is drive businesses dependent on sugar across the border to Canada or Mexico.

If a candidate wants to talk about Oreos being made in Mexico — and if that candidate is a classical liberal, limited-government conservative — that candidate will pledge to undo sugar quotes and tariffs.

If, instead, the candidate is a huckster making a cheap populist appeal to Americans too ignorant to understand what’s going on, that candidate will run his mouth about Nabisco and pledge not to eat Oreos.

UPDATE: I have talked about sugar protectionism and its unintended side effects before, here.

Virginia Shooting: Awful

Filed under: General — Patterico @ 6:05 pm

There’s nothing to be gained from making some kind of political comment about this thing, or watching any videos, or naming the crazy scumbag who did it. It’s just sad.

“Human Action” and Robert Murphy’s “Choice,” Part 5: The Division of Labor

Filed under: Economics,General,Human Action and Choice — Patterico @ 7:45 am

This is Part 5 of my ongoing series of posts summarizing Bob Murphy’s indispensable book Choice: Cooperation, Enterprise, and Human Action. Murphy’s book is itself is a summary of Ludwig von Mises’s classic treatise “Human Action” — so you’re reading a summary of a summary. Hey, it’s a blog. Short and concise is what we do.

The idea of this series of posts is to popularize and spread the word about Austrian economics and educate the public. Rather than list all the previous parts, I have created a category for all these posts, called “Human Action and Choice,” so that all these posts can be read (in reverse order) with a single click. Note well: any errors in these summaries are mine and not Murphy’s.

Chapter 5 is a meaty chapter, but an important one. It revolves around the critical concept of the division of labor, which Mises saw as the foundation of all human society, and the reason that we have achieved whatever prosperity we have achieved. The importance of the division of labor, then, cannot be overstated. Understanding the division of labor allows one to spot economic fallacies all over — whether the fallacy is the so-called benefits of buying “local,” or the notion that a nation benefits its citizens by imposing trade barriers, or by preventing jobs from being exported overseas.

If every household tried to be completely and utterly self-sufficient, civilization would collapse. One of the key reasons we have the standard of living we have is because people specialize in particular tasks. The advantages of doing so are numerous. People don’t waste time switching between tasks. Automation is promoted because it makes sense to invest in machines. This is turn gives rise to economies of scale, which leads to tremendous savings. Many tasks require a minimum threshold of workers to accomplish them. And of course the division of labor allows people to use their natural aptitude to its greatest extent, or to acquire a special aptitude through experience.

But the benefits of the division of labor apply regardless of differing aptitude, as economist David Ricardo showed in the early 1800s with his explication of the principle of comparative advantage. This is critical to understand, and destroys the argument for tariffs and other protectionist measures. The notion is this: even if you are better than me at both tasks A and B, together we are more productive if you specialize in one task, and I specialize in the other. Namely, one should specialize in the task in which their advantage is most pronounced.

Murphy gives an example to illustrate the point. Say a store owner (Marcia) is better than the hired help (John) at everything. Store owner Marcia can convince someone to buy an item in 15 minutes, while it takes hired help John two hours to accomplish the same result. Marcia can tidy up the store at closing time in half an hour, while the hapless John takes an hour to do the same. The store owner Marcia is better than the hired help John at both tasks, but Marcia has the greatest comparative advantage in selling, since she can sell eight times as fast as John, and can tidy up only twice as fast. So at closing time, Marcia should concentrate on selling and let John do all the tidying up. She will make far more money this way than she would if she and John did not specialize. You can run any similar experiment with actual numbers and you will see that the math always works out in favor of specialization.

The division of labor is (of course) of no use without the ability to trade and cooperate. This, to Mises, was central. Again: Mises goes so far as to describe as the very foundation of human civilization the fact that humans are more productive when they act in concert with each other — as long as they are able to recognize that fact. Thus Mises rejects the naively sunny view that altruism is the fundamental underpinning of society — but he also rejects social Darwinism, in which stronger people dominate weaker ones for the good of humanity.

Finally, Mises posits that the highest productivity can occur only in a free market. While a command economy can enjoy the benefits of the division of the labor, those benefits will pale in comparison to the fruits of a truly free market. Future chapters (and posts) will illustrate this further.

This, From An “Impartial” Media?

Filed under: General — Dana @ 6:39 am

[guest post by Dana]

The image has now been removed from the ABC7 website.

Untitled-1

Reporting with complete independence, just like Jorge Ramos reassured us he would do upon disclosing that his daughter works for the Hillary Clinton presidential campaign.

–Dana

8/25/2015

Trump: Zero Class

Filed under: General — Patterico @ 7:47 pm

This really does deserve its own thread.

Fox has demanded an apology (which itself is silly). During the press conference from the post below, Trump said he will not apologize, and that Megyn Kelly should really apologize to him. For asking tough questions, apparently.

What a simpering, small, weak, obsessive little baby he is.

P.S. During the press conference he also justified his obsessive tweets about Kelly, saying: “When people treat me unfairly, I don’t let them forget it.”

Put that guy in charge of the IRS!!!

UPDATE: This is pretty good.

Donald Trump To Jorge Ramos: You’re Fired!

Filed under: General — Dana @ 7:12 pm

[guest post by Dana]

Jorge Ramos, Univision news anchor, found himself unceremoniously escorted out of Donald Trump’s press conference today because he would not stop badgering Trump, even though Trump hadn’t called on him:

As Trump took the podium, Ramos stood up and asked Trump a question about immigration, and Trump’s immigration plan. Trump, ignoring Ramos, called on someone else. Ramos continued trying to asking the question, to which Trump responded, “Excuse me, sit down. You weren’t called.” Ramos continued, and Trump repeatedly told him, “Sit down.”

Ramos then protested, “I have the right to ask a question.” Trump answered, “No you don’t. You haven’t been called.” Ramos again said that he has the right to ask a question, to which Trump retorted, “Go back to Univision.”

Ramos continued to press on, at one point stating “You cannot deport 11 million people” as Trump tried to take other questions.

Eventually, a man came over and escorted Ramos out of the event as Ramos continued to try to ask his question and Trump told him to sit down because he hadn’t been called on. As Ramos was being removed from the question he said, “Don’t touch me, sir. You cannot touch me.”

Apparently, Ramos returned to the conference later and was able to ask Trump questions.

I heard a couple of pundits on the news aghast at the lack of presidential decorum shown by Trump at the presser. Clueless that they are, this I-don’t-care-who-you-are attitude and refusal to subordinate himself to the GOP elites and media is precisely why he is ahead in the polls. They are totally unprepared to handle a problem like Trump. And that’s a fun thing to see.

–Dana

UPDATE BY PATTERICO: OK, this is good:

SCANDAL! Heckler Ejected from Trump Press Conference

Filed under: General — Patterico @ 6:41 pm

The headlines are all over the Internets. Trump ejects trusted Univision anchor from press conference! Here is a representative headline from the newsplainers at Vox:

Jorge Ramos is the most trusted name in Latino news. Donald Trump bounced him from a press conference.

Vox explains:

Donald Trump doesn’t like people who criticize him, as a general rule. Donald Trump also does not like Univision — he’s suing the Spanish-language news network for $500 million after it dropped coverage of his Miss Universe pageant.

So when Univision journalist Jorge Ramos — the most trusted name in Latino news — asked a question at a Trump press conference without getting called on, Trump had his security detail bounce Ramos from the press conference, shouting “Go back to Univision!”

Yeah, that’s not what happened.

This I know, because I watched the actual video.

What happened was that Ramos, a partisan hack pseudo-journalist, got up without being called on — and then, when Trump explained to him he hadn’t been called on, proceeded to disrupt the entire press conference. He would not stop running his mouth and having him ejected was the only reasonable choice. Trump did it in classic Trump style, with a little snide remark . . . but he didn’t shout.

And he ultimately let the guy back in, apparently, and let him ask his questions — once the guy decided that he wasn’t going to unilaterally take over the entire event and ignore all rules of professional courtesy and basic good manners.

You know, after Trump’s petty, thin-skinned, weak tweets last night obsessing over Megyn Kelly, I was disgusted by Trump, and ready to blast Trump again after reading these headlines about Ramos. Now I am blasting the people who lied about it.

P.S. Anyone know where I can find any video of the entire press conference? I’d like to see it, but when I try to Google for it I am drowned in dishonest headlines about Ramos.

UPDATE: Embeddable video of the whole press conference:

Thanks to nk.

UPDATE x2: I’m closing comments on this thread. Comment on Dana’s post, which has a better headline.

Those Severed Baby Heads Are Sure Funny

Filed under: General — Dana @ 5:18 pm

[guest post by Dana]

Stem Express CEO Cate Dyer is seen discussing different aspects of providing fetal baby parts in the latest Planned Parenthood video released today by the Center for Medical Progress:

StemExpress: I know we get requests for neural [tissue]. It’s the hardest thing in the world to ship.

Buyer: You do it as the whole calvarium.

StemExpress: That’s it, yeah, that’s the easiest way. And I mean we’ve actually had good success with that in the past.

Buyer: Yeah, Make sure the eyes are closed!

StemExpress: [Loud Laughter] Tell the lab it’s coming. So they don’t open the box and go, “Oh God!” [Laughter] So yeah, whereas so many of the academic labs cannot fly like that. They’re just not capable.

Buyer: Why is that? I don’t understand that.

StemExpress: It’s almost like they don’t want to know where it comes from. I can see that. Where they’re like, “We need limbs, but no hands and feet need to be attached.” […] They want you to take it all off, like, “Make it so that we don’t know what it is.”

Buyer: Yeah. Bone the chicken for me and then I’ll eat it.

StemExpress: That’s it. But we know what it is [Laughter]. […] Their lab techs freak out, and have meltdowns, and so it’s just like, yeah.

If their collective conscience was clear and they had no qualms about what they were doing, there wouldn’t be any meltdowns happening or any need to remove the brutal reality of the baby’s original form. After all, it wasn’t ever human, right? But they know. Clearly, on some level, they know.

There is also a discussion about getting intact babies:

SE: Oh, yeah, I mean if you had intact cases [abortions] which we’ve done alot. We sometimes ship those back to our labs in their entirety.

And then there’s the issue of quantity:

Buyer: What would make your lab happy?

SE: Another 50 livers a week.

–Dana

On “Black Lives Matter”

Filed under: General — Dana @ 6:49 am

[guest post by Dana]

Two op-eds with two different perspectives on the Black Lives Matters movement were published just two days apart, as well as a third video “op-ed” by an angry resident of Missouri.

First, Leonard Pitts wrote about the “moral cowardice” of the Black Lives Matter counter-claim that “all lives matter”, a claim that Mike Huckabee made on CNN:

When I hear people scream ‘black lives matter,’ I’m thinking, of course, they do. But all lives matter. It’s not that any life matters more than another.”

Pitts also objected to Huckabee’s claim that “Martin Luther King would be “appalled by the notion that we’re elevating some lives above others.””

Thus he says of the Black Lives Matter movement:

Namely because, while police abuse is not unknown in other lives, it is disproportionate in black lives. This is what Huckabee and the “All lives matter” crowd quail at recognizing. To treat where it hurts, one must first acknowledge that it still hurts, something conservatives often find hard to do because it gives the lie to their self-congratulatory balloon juice about how this country has overcome its founding sin.

That sort of willful ignorance has, unfortunately, become ubiquitous.

Which is why, for me, at least, the most inspiring sight to come out of Charleston following the racial massacre there was not the lowering of the Confederate battle flag, welcome as that was. Rather, it was a march through town by a mostly white crowd chanting, “Black lives matter! Black lives matter!”

To see those white sisters and brothers adopt that cry was a soul-filling reminder that at least some of us still realize we all have access — connection — to each other’s pain and joy by simple virtue of the fact that we all are human.

God love them, they did not slink guiltily from that connection. Instead, they ran bravely to it.

Second, GOP Presidential candidate Ben Carson wrote about the misdirection of the Black Lives Matter movement:

The idea that disrupting and protesting Bernie Sanders speeches will change what is wrong in America is lunacy. The “BlackLivesMatter” movement is focused on the wrong targets, to the detriment of blacks who would like to see real change and to the benefit of its powerful white liberal funders using the attacks on Sanders for political purposes that mean nothing for the problems that face our community.

The notion that some lives might matter less than others is meant to enrage. That anger is distracting us from what matters most. We’re right to be angry, but we have to stay smart.

Of course, the protesters are right that racial policing issues exist and some rotten policemen took actions that killed innocent people. Those actions were inexcusable and they should be prosecuted to deter such acts in the future.

But unjust treatment from police did not fill our inner cities with people who face growing hopelessness. Young men and women can’t find jobs. Parents don’t have the skills to compete in a modern job market. Far too many families are torn and tattered by self-inflicted wounds. Violence often walks alongside people who have given up hope.

And, compelling lifelong Missouri resident and Navy veteran Peggy Hubbard to record a searing video about the confused priorities of the Black Lives Matter movement were two recent deaths: Mansur Ball-Bey was a young black man who police claim tried to “run out the back door of the house where they were serving a warrant and that he pointed a stolen gun at them before they shot” and the death of 9-year-old Jamyla Bolden who was killed by a stray bullet from a drive-by shooting while she did her homework. Hubard takes no prisoners:

Last night, who do you think they protested for? The thug. The criminal. Because they’re hollering police brutality. Are you fucking kidding me? Police brutality? How about black brutality. You black people, my black people, you are the most violent motherfuckers I have ever seen in my life. A little girl is dead. You say black lives matter? Her life mattered. Her dreams mattered … Yet you trifling motherfuckers are out there tearing up the neighborhood I grew up in.

Not to be deterred by her critics, Hubbard responded to those accusing her of being an Uncle Tom:

“Given all the comments I received, black and white, saying, ‘Don’t stop, we need your voice,’ I’m going to keep going,” she said. “This is not a race issue. It never has been a racial issue … This is about accountability and responsibility … Last night we had another homicide … and we’re saying black lives matter. Black lives matter, white lives matter, Asian lives matter, Hispanic lives matter, Lithuanian lives matter, Russian lives matter, life in general matters … but it’s never gonna get better until we admit that we have a problem in our community.”

–Dana

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