Mises Explains Profit

What makes profit emerge is the fact that the entrepreneur who judges the future prices of the products more correctly than other people do buys some or all of the factors of production at prices which, seen from the point of view of the future state of the market, are too low. Thus the total costs of production — including interest on the capital invested — lag behind the prices which the entrepreneur receives for the product. This difference is entrepreneurial profit.
By Ludwig von Mises in Profit and Loss, p 8

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History of Greece by William Godwin

I am making freely available the History of Greece by William Godwin as a PDF. This is a very rare book which could not be found online until today. Enjoy. There's a high resolution version too.

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Infinity Blade Guide

I wrote a guide to the iOS game Infinity Blade:


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Street Musicians & Public Goods

Street musicians provide a public good. Anyone who wishes can be a free rider. There's no obligation to pay, and the majority of people do not pay.

They provide this public good without any help from the Government. Public goods can be provided without Government assisstance.

They also provide this public good without any ability to force anyone to pay. They do not wish such an ability.

Street musicians prefer to attract a crowd, even though they know that means they will have more free riders on the day. Free riders are harmless to them at worst, and actually can be positive (they add prestige and may perhaps tell someone about it later).

People fear that public goods cannot be provided because everyone will choose to be a free rider. But this is not what happens. In real life, everyone can be a free rider for street musicians, but people choose not to be. Some pay.

Enough pay that many street musicians go back the next day and do it again. Their actions reveal the pay is adequate and the profession preferable, for them, to any other.

How can it be that a profession can be viable when it provides nothing but a public good and everyone can have a free ride? This directly contradicts mainstream economic thinking on the matter. The only thing to do is conclude that those thinkers are mistaken (and to wonder why they failed to notice such a common place fact).

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Movie Advice

In some movies, a character in the movie gives advice which is very helpful and important, and the advice receiver's life is significantly changed for the better.

The advice is almost always very generic. It's so generic you could put it in a movie intended to appeal to millions of different people, and offend no one, and many of them could even think it's decent advice for themselves.

The advice is unoriginal. It's stuff you could get from a movie without needing anyone to advise you.

So, why does it work? How can advice that is available in movies be effective for anyone? Shouldn't the characters have heard it before, and if it's useful for them then already be doing it to the best of their abilities? Do the people in movies not themselves watch movies with advice?

There seems to be a theory that telling people what is already common knowledge can be life changing if you say it at the right moment, with the right emotions in your voice.

It's ridiculous. In real life (and so it should be in movies that hope for realism), everyone is already familiar with generic movie advice, and if they have problems despite already knowing that advice then something better will be required to solve them.

Maybe something like this.

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The Categorical Imperative is Mistaken

Kant offered us the categorical imperative:

Act only according to that maxim whereby you can, at the same time, will that it should become a universal law.
But all possible actions accord with infinitely many different universal laws.

For example suppose I want to rob someone. That is compatible with the law "rob everyone in sight". It is also compatible with the universal law consisting of "never rob anyone" plus specifying one exception. That law is universal since it covers all cases (that's what universal means).

It's also compatible with, "Commit the robbery. 500 years and N seconds later, if still alive, eat a carrot. Otherwise follow whim." As N ranges from 0 to infinity, we construct infinitely many universal moralities. And we can replace the robbery with anything else we like.

The categorical imperative is, contrary to its intent, compatible with all actions, and with all moral worldviews. Another simple way: take any moral worldview you already have which advocates what you want to do, then add "or if something is not specified, follow your whim" to make it universal.

The primary flaw is that the categorical imperative incorrectly assumes that actions only accord with one universal law each.

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Godwin's Political Philosophy

Here is Godwin summarizing his own political philosophy.

Political and Philosophical Writings of William Godwin; General Editor Mark Philp; London 1993; Volume 2; p 219-220 [The Administration of 1806, published 1807]
My political creed may be stated with great brevity and clearness. It consists of two parts, speculative and practical. In speculative politics, I indulge with great delight to my own mind (and I cannot easily persuade myself with injury to others), in mediating on what man can be, on all the good which our nature, taken in the most favourable point of view, seems to promise, and in endeavouring to trace in the wide and unexplored sea of future events, through what adventures and by what means that good (certainly in many of its branches exceedingly remote) may ultimately be brought home to man.

In practical politics, my path is marked with many a beacon, which is wanting to me in the tracks of speculation, and therefore I may hope is less exposed to error. In the first place, I am an enemy to revolutions. I abhor, both from temper, and from the clearest judgment I am able to form, all violent convulsions in the affairs of men. I look to the understanding alone for all real and solid improvements in the structure of human society. Whether the human mind shall exult most in the display of a gilded chariot and a splendid drawing-room, or in simplicity of manners and the practice of virtue, must depend on the judgment the human mind in the successive revolutions of things shall form of what it is that is exquisite and admirable.

I am therefore practically a friend to the English constitution. Not that I regard it, as some men have done, as the model of all that is the best in political government, and the consummation of human wisdom. But I find in it much that is good; and when I compare it with the government of the countries that surround us, devoutly do I admire it. Were it much worse than it is, my principles would restrain me from assailing it with violence; but as it is, that patience and filial tenderness towards it which my principles enjoin, is made likewise agreeable to my inclinations. I would treat it as I would a robe bestowed on me for the most useful purposes; I would repair it where it became decayed; in those repairs I would change in some respects the fashion of it as my conveniency seemed to require; but the changes that took place (to however great a sum they might one day amount) should be, separately taken, gentle, temperate, almost insensible. From a pure system of feudal manners, which the English constitution at one time was, it has gradually adapted itself to a mercantile and considerably luxurious nation; and I neither expect nor desire that it should continue unchanged in times to come, and more than it has remained unchanged in ages past.

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Trade is Error Correction

Trade consists of correcting errors. That's why it's profitable.

The errors are errors about who has what property.

As with all error correction, criticism and knowledge are central.

All trade requires knowledge: you have to know that it'd be a good idea to trade X for Y or you won't do it.

All trades require criticizing and wanting to change the status quo. I haven't got an iPad, *but that's a mistake*, I should have one! I haven't got anything to eat for dinner, but I should change that! Or more advanced, "That company is doing some useful stuff, but I have an even more valuable project for them to work on than their current one, so I'll buy them out and change their focus" or "That store is doing ok but if i owned that particular building I could provide more value there, so I'll buy it".

When you're right, you buy a store (say) for $110, that had a value of $100 to the old owner, and then you make a profit of $200 from it. So by correcting the error (store being used in a way with $100 of value instead of the new way worth $200), value is creating and both parties to the trade gain.

When you're mistaken -- i.e. you don't correct an error -- then you buy for $110, but only make $90. So you come out behind. But at least your mistake didn't hurt the other guy, it's only your problem, which is good.

In this way, correcting errors is encouraged, and creating errors is discouraged.

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Godwin Against Parochial Thinking

_Thoughts Occassioned by the Perusal of Dr Parr's Spital Sermon_, by William Godwin, p 63
One of the greatest evils which can infest political disquisition, is the imagination that what takes place in the spot and period in which we live, is essential to the general regulation and well-being of mankind.
Yet again Godwin anticipates _The Beginning of Infinity_ which criticizes parochialism.

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The Machinery of Freedom -- Free PDF


Really great book! Read it! It's about Anarcho Capitalism.

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Force Is Complicated

A mistake made by Ayn Rand and some libertarians is to think it's simple to decide what is and isn't force.

Consider these example situations:

1) A biker is forced to steer well around a car being washed or else be hit with some water.

2) A car door is opened 10 ft in front of a biker who steers around it. The biker didn't see the driver look first.

3) Some amateur bikers go slowly blocking the road. They choose not to go single file to let people pass.

4) A car doesn't use a blinker when it should.

5) A baseball field is built so that home runs which clear the fence could hit people at a nearby park.

In each case, it is not obvious if force is being initiated. That means the principle "don't initiate force" isn't a panacea, because reasonable people can disagree about what force is.

One of the crucial mechanisms of a peaceful, civilized society is that people in general make a reasonable effort to avoid doing anything in the grey zone which might be taken as force, but at the same time if someone does do something borderline bad they do their best to overlook it and not get upset. Almost everyone having a double standard in this way (aim for one standard, but accept things up to a worse standard from others) is really effective. People don't suceed at this every time, but it's a major source of confliction prevention.

Another mechanism of our society is to treat the same action differently depending on the person's intention. Was it an accident or intended? Was he trying to accomplish a legitimate purpose that people should accomplish, or not? If you hit someone while playing baseball that's one thing; if you just find a fence with people on the other side and start hitting balls over that's another.

It's important to be tolerant of impositions others impose on us, and to expect them, not to just draw a line and become hateful and aggrieved if anyone crosses it.

One underlying reason this attitude is effective is that conflict resolution and negotiation is expensive. I don't have in mind only courts, but even simply talking to a stranger, and making them understand the issue, can be hard. They don't know what's on your mind, or what kind of things you care about or expect from life, and they may well assume if you're talking to them it must be important and so misunderstand any small complaint.

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Burke on Economics

quotes from Thoughts and Details on Scarcity by Burke:

The balance between consumption and production makes price. The market settles, and alone can settle, that price. Market is the meeting and conference of the consumer and producer, when they mutually discover each other's wants. Nobody, I believe, has observed with any reflection what market is, without being astonished at the truth, the correctness, the celerity, the general equity, with which the balance of wants is settled. They who wish the destruction of that balance, and would fain by arbitrary regulation decree, that defective production should not be compensated by encreased price, directly lay their axe to the root of production itself.
We, the people, ought to be made sensible, that it is not in breaking the laws of commerce, which are the laws of nature, and consequently the laws of God, that we are to place our hope of softening the Divine displeasure to remove any calamity under which we suffer, or which hangs over us.
the State ought to confine itself to what regards the State, or the creatures of the State, namely, the exterior establishment of its religion; its magistracy; its revenue; its military force by sea and land; the corporations that owe their existence to its fiat; in a word, to every thing that is truly and properly public, to the public peace, to the public safety, to the public order, to the public prosperity. In it's preventive police it ought to be sparing of its efforts, and to employ means, rather few, unfrequent, and strong, than many, and frequent, and, of course, as they multiply their puny politic race, and dwindle, small and feeble.

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