Open Discussion: Economics

*Basic Economics* by Thomas Sowell:

> the inherent reality is that there are not nearly enough beach-front homes to go around and prices simply convey that underlying reality.

It's not the fault of *prices* that there aren't enough beach-front homes for everyone. A good point. The same thing applies to iPhone X's.

*Basic Economics* by Thomas Sowell:

> Prices coordinate the use of resources, so that only that amount is used for one thing which is equal in value to what it is worth to others in other uses.

Terrible sentence. Confusing writing. It splits "that amount" from the "which is..." clause which explains what amount he's talking about.

*Basic Economics* by Thomas Sowell:

> During the brief era of glasnost (openness) and perestroika (restructuring) . in the last years of the Soviet Union, two Soviet economists named Nikolai Shmelev and Vladimir Popov wrote a book giving a very candid account of how their economy worked and this book was later translated into English.

> As Shmelev and Popov put it, production enterprises in the U.S.S.R. "always ask for more than they need" in the way of raw materials, equipment, and other resources used in production. "They take everything they can get, regardless of how much they actually need, and don't worry about economizing on materials," according to these economists. "After all, nobody 'at the top' knows exactly what the real requirements are," so "squandering" makes , sense. Among the resources that get squandered are workers. These economists reported that "from 5 to 15 percent of the workers in the majority of enterprises are surplus and are kept 'just in case.' The consequence was that far more resources were used to produce a given amount of output in the Soviet economy as compared to a price-coordinated economic system, such as that in the United States. Citing official Soviet statistics, the Soviet economists lamented:

> According to the calculations of the Soviet Institute of World Economy and International Relations, we use 1.5 times more materials and 2.1 times more energy per unit of national income than the United States. . . . We use 2.4 times more metal per unit of national income than the U.S. This correlation is apparent even without special calculations: we produce and consume 1.5 to 2 times more steel and cement than the United States, but we lag behind by at least half in production of items derived from them. . . . Recently, in Soviet industry the consumption of electrical energy exceeded the American level, but the volume of industrial output in the U.S.S.R. is-by the most generous estimates-only 80 percent of the American level.

> The Soviet Union did not lack for resources, but was in fact one of the most richly endowed nations on earth-if not the most richly endowed.

> Anyway, Curi rejected the research and I don't think I have a grasp as to why. I am a psychologist and to me research is king so I can see many fundamental disagreements happening because of that, so I am hoping to see if I can iron some of those out.

If "research is king," what do you do when multiple pieces of research disagree? What do you do when different people think the same research says different things about reality? What do you do when different people think the same research says the same things about reality but disagree about what should be done about it?

My guess is, you'll think of some methods to resolve those situations. Those methods are philosophy.

>If "research is king," what do you do when multiple pieces of research disagree? What do you do when different people think the same research says different things about reality? What do you do when different people think the same research says the same things about reality but disagree about what should be done about it?

>My guess is, you'll think of some methods to resolve those situations. Those methods are philosophy.

Yes. The method on which it is done would be how I differentiate which research I would choose to go with.

Things like Transparency, is it reproducible, Sample size.

There are useful sites like this one who are a: an international initiative that seeks to improve the reliability and value of published health research literature by promoting transparent and accurate reporting and wider use of robust reporting guidelines.

http://www.equator-network.org/

Also in general I have a hierarchy of research, if that makes any sense. When looking at health studies For example from:

1. Research done with repeated double blind clinical trials

2. Multiple studies where at least there is double-blind and placebo control.

3. Single double-blind study or multiple cohort studies

4. Uncontrolled or observational studies only

So for example, Fish oil and the reduction of Triglycerides has multiple robust Rank 1 studies.

While Vitamin E shows some rank 2 level studies. And Vitamin B1 has shown some reduction in uncontrolled studies.

There's more to it and some information on how to best decide on research can be found on this paper:

https://www.nature.com/articles/s41562-016-0021

> #10988 Have you read the link yourself and critically analyzed it for flaws? I asked a similar question on discord and didn't yet get to the point of reading or commenting on this specific paper, so I haven't rejected it (I did, earlier, say I think lots of papers in this genre are bad and left-biased.)

Oh there's a lot of potential issues with this time of research. There is no standard Objective measure of healthcare that everyone agrees on.

> Also before looking at the paper I tried to ask this question but I haven't gotten an answer yet:

>> so before we talk about health care in other countries, would you agree the US system is absolutely nothing like a free market, and that obamacare made it much worse than it was before?

I don't know. Like I don't know the way obamacare works. I know I used Obamacare for while when unemployed or rather I was working for myself... and it was quite expensive. But I got good quality care, though certain tests I needed were rejected. I have insurance through an employers now and it's much better.

> Also, related: (free market) economics offers logical reasoning which applies quite broadly. In some ways, it's highly falsifiable – any event that happens in a way which *contradicts* economic logic would refute it. And it makes many broad claims, e.g. it has claims about all societies so you don't need to get data from a specific type of society to find a counter-example. If you can point out any economic claim (preferably with a quote from an economist) and then a specific fact which contradicts it, please go ahead. The paper above doesn't appear to be attempting to do that. At a glance, it doesn't appear to be making a claim that a specific idea of (free market) economic logic is contradicted by a particular fact.

The paper is just ranking based on their framework the efficiency of healthcare of 191 countries. In many of the higher ranking countries you'll find free market economies, or freer.

> The reason (free market) economics is generally hard to refute with facts is that it's extremely careful about what claims it makes. If it can't work a point out logically, it refrains from making a claim. Economists do their best to say things that will never be refuted by any real world facts – to figure out logical truths that *are not incorrect*. Because of the style, most serious economics debates are about logic. I think the best way to find a mistake in economics is to to look for a logical flaw because you'll never find any facts to contradict the non-flawed economic logic.

I am out of my depth when it comes to Economics. It's also hard to tell what is what, I can find a paper signed by 500 economists that say raising the minimum wage is good, and a paper that also has 500 economists saying that raising the minimum wage is bad. It's a world I am not eager to dive into.

> Note that there are rival schools of economics, so if you try to refute a claim it's possible I'll disown it as not from my school of economics (as exemplified by Mises). E.g. I sure won't be defending Keynesian or Marxist claims!

I feel like Marxist claims have been refuted by the evidence at this point. Every single time it gets implemented anywhere, nothing but horror follows suit.

How do you decide what is good and bad research?

Andy, have you read the link yourself and critically analyzed it for flaws?

> The paper is just ranking based on their framework the efficiency of healthcare of 191 countries. In many of the higher ranking countries you'll find free market economies, or freer.

So it doesn't dispute or contradict the economic logic which explains that government intervention in healthcare makes things worse?

>You want worlds where there aren't disagreements? Or what? To understand economics, like everything else, you must consider what the arguments are and judge them with your own mind. There's no avoiding that in other intellectual fields either.

Not necessarily. But I do wish it was more scientific, in a way that experts could at least agree on something as basic as minimum wage. They don't seem to. Seems like a total mess to me.

>Minimum wage isn't very hard to understand. It's actually a pleasant issue, IMO, because of how clear cut, logical and decisive the answers are. It's not a squishy issue where there's all kinds of room for reasonable people to disagree. It's been figured out, and the answers are simple and accessible.

I don't have an opinion on minimum wage because I don't know what the outcomes of raising the minimum wage are. I recall someone giving me a giant study, when I asked about this in a progressive forum, that looked at raising the minimum wage of some city in california turned out to have good outcomes but I can't find it. I am posting a request on that same progressive forum asking for it again.

1 is partisan because it counts "social well-being" as health. That means they are trying to count *leftist ideas about how to organize society* as "health", and include such things in their research. For example, access to free government education is considered a social well-being issue by the left, as are government retirement plans like social security. It's also problematic in a non-partisan way because it tries to make "health" way too broad.

2 is a direct contradiction of the (classical) liberal concept of rights. It's part of a current political struggle over the issue of what counts as a right. One way it's commonly debated is about whether there are only "negative" rights like not being punched, or there are also "positive" rights like to be provided with food, healthcare or education. Leftists try to dramatically broaden what counts as a "right", both to advocate for more government services and to undermine and dilute the concept of rights.

3 includes a viewpoint (which contradicts the classical liberal view) on how to achieve peace, which is a political issue. It also hints that they believe that Joe must "cooperate" in the achievement of Bob's health, or else Joe is a threat to peace. It also suggests a role for government in this which is not the night watchman state.

4 is partisan because of its attitude to states. It says the achievements *of States, in areas that liberalism says states should not act in*, are valuable to all. Whereas liberalism says that state action in those areas harms people (both generally and also specifically regarding medical outcomes).

I don't view 5-8 as partisan. I don't see the issue with sharing knowledge (7).

9 is the most blatantly partisan. And it doesn't just advocate government provided healthcare(!), it also advocates government provided "social measures" (e.g. public schools, unemployment insurance, minimum wage laws, homeless shelters, food stamps, probably psychiatric prisons too).

My conclusion is that you are not able to reliably detect partisan, leftist, or otherwise anti-liberal ideas, even when your guard is up and you're looking for them. Fair? And I think the underlying issue is you don't know enough about what liberalism says, including what it says about healthcare. From that situation, I don't think you should jump into trying to debate the matter and advance claims. I think you should instead try to find out what the other side thinks, and why, and then evaluate it yourself (you might actually agree, or in the alternative you would then be able to know what sort of counter-arguments would be important). What do you think?

Andy, have you read the link yourself and critically analyzed it for flaws?

You seem to be intentionally ignoring this question? You twice responded to other things from the same comment. If you think there's something wrong with the question, could you say what? I think it's a reasonable question. In general, I don't want to look at other people's cites that they haven't read and critically analyzed themselves.

> the crux was the disagreement on whether an outcome is reliable or not

Having been on discord, I don't know what you're talking about.

I think the crux of the disagreement is: *government intervention in healthcare causes worse outcomes than the free market*. It makes things worse, not better. It doesn't help.

You disagree. Is the study meant to be relevant to this? I guess the authors intend it to be relevant to this, but actually it's not very relevant.

> I am more interested in empirical evidence of how things actually ARE vs how they could be in a hypothetical utopian world

I don't think you have a detached interest in how things actually ARE.

I think you want how things actually ARE to help make decisions and take positions. Should I do A or B? Should the government do X or Y?

But as soon as you do that, you are out of the realm where empirical evidence on its own can answer. You have to introduce values and logic and methods and philosophy to get to A or B, X or Y.

Which you, necessarily, do. The problem is that you don't think about them explicitly. You think you're just following evidence, when you're really introducing a ton of other stuff without explicitly thinking about what it is (and whether it's any good).

Characterizing thinking about the other stuff explicitly as a hypothetical utopian world is a straw man. You need that stuff to do anything useful in the real world like make a decision or take a position on what government policy should be.

curi Today at 2:47 PM

nor about whether you are aware you're taking an opposite position to BoI

HeuristicWorld (Andy)Today at 2:47 PM

lol

If BOI and Popper say that you ignore the data and real life outcomes then I guess I am rejecting it.That's literally what I value about the scientific method, not the theories. Testable and falsifiable claims.

I somehow doubt that's what they are claiming

Right but what I had said initially was I am a fan of the scandinavian model.

>HeuristicWorld (Andy)Yesterday at 9:50 PM

Based on the metrics done. It seems they have the best level of healthcare, education, life expectancy. I know they are having issues with immigration but I don't think that's due to their economic system. Or maybe it is. I am very uninformed.

oh and happiness

>JustinCEOYesterday at 9:53 PM

so you're looking at some metrics and you think the socialist element in their policy causes the metric outcomes you like. why?

>HeuristicWorld (Andy)Yesterday at 9:54 PM

I don't know if that's what is the cause of the outcomes. I am just basing everything entirely on the outcomes.

It gets hard to follow the discord at this point because there was 3 different conversations going on at the same time but Justin said that Happiness measurements are trash and I said I am not so sure about that. Then I asked Justin what makes the outcomes of scandinavian countries good

>i think these Nordic model countries already had smart western people in them before they started large scale wealth redistribution. and they have still retained enough capitalism. and that's enough to do really well

>HeuristicWorld (Andy)Yesterday at 10:08 PM

I see well that's a hypothesis. You think they are not successful because of the model but because of the people. They were able to accumulate enough wealth to distribute etc...

Would this be refuted if they are still generating massive wealth presently?

>JustinCEOYesterday at 10:09 PM

i'm not saying they stored up a bunch wealth in advance to do socialism, i'm saying they're not dumb enough to totally kill the golden goose... altho even in SWEDEN it looks like they may be moving away from nordic model some

if latest polls are to be believed...

>ok right but it seems like you're implying that the generation of this golden goose was done in the past. So their current model would be detrimental to the golden goose. Am I getting you correctly?

>JustinCEOYesterday at 10:12 PM

interferences with capitalism are bad in general but capitalism is robust enough to tolerate a lot of interference and still create tons of wealth

>HeuristicWorld (Andy)Yesterday at 10:14 PM >interferences with capitalism are bad in general but capitalism is robust enough to tolerate a lot of interference and still create tons of wealth

>so that would mean that the model is feasible then right? if it can still generate tons of wealth while maintaining the egalitarian outcomes.

This is where I'd like to focus on for a moment if we can.

If their system is capable of generating tons of wealth and have good egalitarian outcomes simultaneously, doesn't that mean at least that the system is feasible? What am I missing?

I'm not aware of any minimum wage researcher who had no opinion and then looked at the data to try to figure out what opinion to have. They all – on both sides – seem to first have *economic theories* which tell them what the answer is. They already think they know the answer before they do the research. And I don't blame them for that. Some are Marxists, some are liberals – would they be better researchers if they were so ignorant of such matters that they had not formed opinions?

Marxist and capitalist economics both have reasoning which tells you about what the effectives of minimum wage laws will be.

Also note: all research could do, at best, is convince someone that their understanding of economics is incorrect in some way. But emprical facts can never tell them what what their logical thinking about economics is wrong or how to change it.

No matter what the research, I would never abandon economic thinking. If I had to abandon my current beliefs about economics (due to empirical contradiction), I would attempt to create new ones. One *needs* beliefs about how to correctly logic and reason about economics in order to think about economic issues and reach any conclusions about anything. Data doesn't speak for itself and doesn't tell you what ideas are right, it only gets referred to by ideas (including criticisms).

> If their system is capable of generating tons of wealth and have good egalitarian outcomes simultaneously, doesn't that mean at least that the system is feasible? What am I missing?

You think that you can sacrifice (other people's) wealth in favor of other things. But what you're essentially doing is *using physical force* to *force* people to donate to a (government run) charity of your choice (a pro-egalitarian one) that they do not want to donate to. The method by which you're sacrificing total wealth is by using *violence* against people who disagree with you, which seems OK to you because, like a mafia boss, you see that even an indirect threat is usually enough to get obedience, so you (or more precisely, the government agents implementing things you're defending) don't have to actually say "do this or else i will shoot you", let alone shoot people, very often.

On top of that, you haven't specified just what these "good egalitarian outcomes" are and what policies will lead to them. I have doubts about how good they are, how egalitarian they are, and whether they will in fact be the outcomes of the policies.

>I don't have an opinion on minimum wage because I don't know what the outcomes of raising the minimum wage are. I recall someone giving me a giant study, when I asked about this in a progressive forum,

https://mises.org/library/how-minimum-wage-laws-increase-poverty

Here is an **explanation** about minimum wage that Elliot linked on discord:

>Raising the minimum wage is a formula for causing unemployment among the least-skilled members of society. The higher wages are, the higher costs of production are. The higher costs of production are, the higher prices are. The higher prices are, the smaller are the quantities of goods and services demanded and the number of workers employed in producing them.

>It's not violence to take Joe's money from him, by threat of violence (and actual violence of he resists), because Sue and Bill agree with what you're doing? That doesn't make sense.

That's like saying everytime I donate to charity, violence was committed against me. I don't really buy that argument.

>None of those things are specific policies or specific outcomes (you didn't define good education).

Well would you agree that some countries have better education systems than others?

> #11017 Every time you donate to charity *voluntarily*, there was no violence. Every time you donate to a charity that you do not want to donate to, because I threatened that armed men would take the money or put you in jail if you didn't, that was violence.

Right. I feel like that's the contract that the nordic countries have entered in. They voluntarily give part of their income. Otherwise, would they not move ? People seem to be voting with their feet and moving there and not away.

> Sure.

So are you aware of any ranking system that you agree with on the methods that tells us which countries are better than others etc...?

I wrote some scattered thoughts on minimum wage on the discord chat, pasting here:

some scattered thoughts on econ stuff

you need to think about econ in terms of logic and principle because of the complexity of IRL economic life, politics, etc.

there's always lots of stuff happening simultaneously

e.g. in the same time period you could have

1) a sustained period of nationwide economic growth

2) a national policy of deregulation

3) a national policy of more restrictive immigration

4) a local policy of a minimum wage increase

and say wages rose over this time period

what caused the rise?

well if you're a min wage advocate you might say #4

there was a min wage increase and then wages rose!!

QED??

govt passing a minimum wage increase and then wages rising without an increase in unemployment is an outcome compatible with free market theory. cuz e.g. if the govt minimum wage is below the lowest rate people are willing to pay for labor, then the govt minimum wage won't actually cause any big issues. it's kinda irrelevant (though its a bad sign for that society that the govt is willing to pass those kinda laws, but leave that to the side or now)(edited)

this outcome (of a minimum wage increase that has no negative economic consequences) tends not to happen IRL for various reasons but it's possible

but what definitely does happen is people looking at some data and seeing some positive wage trend and thinking that a minimum wage law helped somehow

esp if they're willing to pay selective attention to stats and ignore other stuff

"oh wages went up, min wage worked!" (ignores increased unemployment)

"oh wages went up, min wage worked!" (ignores local economic boom driving wage increase)

"oh wages went up, min wage worked!" (fraudulent unemployment stats which literally don't count long term unemployed people hide the negative economic consequences)

btw the min wage is really nasty cuz it literally prohibits people from selling their labor below a certain price. which means if someone can't do work above a certain hourly rate the govt is literally forcing them into poverty and dependency. lefties apparently call this policy one of "dignity" :thinking:

cuz ultimately unless you're gonna force employers to hire people or have the govt hire everyone who is unemployed to do govt-makework or something like that

the minimum wage remains zero regardless of the stupid govt laws on the books

cuz people can just not hire someone

and then they're getting paid 0

#11023 This is a Marxist view which has been refuted. Do you want to learn about this? Do you want reading recommendations? Will you follow up and try to discuss this to a conclusion?

#11029 I didn't mean to post that. It's actually done, but the last paragraph should be in section (1) instead of (3).

#11031 Its an epub version. If you click on GET it starts the download.

Anyway, I am looking forward to this. We'll see if we can gain some ground.

From Chapter 18 of Economics in One lesson, something that is bothering me

"The first thing that happens, for example, when a law is passed that no one shall be paid less than $106 for a forty-hour week is that no one who is not worth $106 a week to an employer will be employed at all...

The only exception to this occurs when a group of workers is receiving a wage actually below its market share worth"

So one of the things that this is assuming is that people are getting paid what they are worth by the market. I don't think a place like Amazon is paying people what they are worth presumably, or they wouldn't have to go on welfare if working full time for one the richest companies in the planet.

I thought I sent this already but I guess it didn't go through.

While I am reading your recommendations, do you mind checking this out and tell me what you think?

http://ftp.iza.org/dp1072.pdf

> It's not engaging with the (free market) literature

It's also, in the same way, not engaging with the Marxist or Keynesian literature or other schools of thought.

#11039 It says:

> With so many potential caveats based on theoretical choices

it said this after listing only two caveats plus 3 mere bullet points. and one of the two caveats was a claim that employers might pay above-market wages voluntarily, relative to a simplified model which ignored some factors. ok, so what? sounds like a reason there is *less* need for minimum wage laws! they claimed it would cause unemployment, without details, and seemed to think makes minimum wage laws ok b/c (without any details) they seem to think something like that both factors (the above-market wages and the minimum wage laws) cause the *same* unemployment, so minimum wage doesn't cause additional unemployment.

as to the other caveat, monopsony ("in which a single buyer substantially controls the market as the major purchaser of goods and services" from their link), that is simply not the labor market situation. there is no single buyer who purchases most of the labor of workers.

so they are mistaken to give up on logical analysis and turn to empirical research. instead they should try to think through the small number of caveats (or read the books of the economists who have already done that).

i think you will find it most informative to ignore material like this, for now, and focus on understanding the free market view.

I don't think I am fully understanding this section:

> Marx begins his analysis of the alleged exploitation of labor under capitalism with a distinction between the fundamental economic character of the ages that preceded capitalism and the fundamental economic character of capitalism. The distinction he makes is between two sorts of the circulation of money from hand to hand. The one sort, he calls “simple circulation.” It supposedly characterized economic conditions prior to capitalism. (“Simple circulation,” it should be noted, is actually the same state of affairs that Adam Smith described in The Wealth of Nations as “the original state of things.”) > Under simple circulation, manual workers produce commodities, designated by “C,” sell them for money, designated by “M,” and then use the money earned to buy other commodities, also designated by “C.” Thus, simple circulation is the sequence C-M-C. Under simple circulation, there is allegedly no exploitation of labor. The workers—the wage earners—receive the full proceeds brought in by the sale of their products. These sales proceeds are viewed as indistinguishable from wage payments, as though they were in fact wage payments. This is because, following the practice of Adam Smith, all income due to the performance of labor is assumed to be wages. To say it once more, in simple circulation all income earned in producing commodities for sale is regarded as wages. Smith provides the clearest possible example of this view when he writes, “In some parts of Scotland a few poor people make a trade of gathering, along the sea-shore, those little variegated stones commonly known by the name of Scotch Pebbles. The price which is paid to them by the stone cutter is altogether the wages of their labour; neither rent nor profit make any part of it.” > The exploitation of labor begins, according to Marx, only with the coming of capitalists and “capitalistic circulation.” Here the starting point is an outlay of money by the capitalists to pay wages and buy previously produced commodities in such forms as materials and tools and, ultimately, also machines and factory buildings. These outlays of money are for the purpose of producing commodities that are to be sold in the market, hopefully, in the view of the capitalist, for a larger sum of money than he has expended in producing them. Thus, capitalistic circulation is represented by the sequence M-C-M or, more precisely, by the sequence M-C- M′, with M′ used to represent the second M as being larger than the first and thus the sequence as a whole as showing a profit

#11042 M-C-M' describes the business process. it means you spend money (M) on raw materials, labor, and other inputs to production. in that way, you create and then sell commodities (C), and then get revenue (M') at a later time from the sales. In this case, the amount of profit is M' minus M.

C-M-C means you produce and sell commodities, get money, and use it to buy commodities. The profit in this case is M. You can think of this as a self-employed person working for themselves, so they have no wages, just sales revenues. And they didn't invest any money into production, only their own labor, so all of their sales revenues are profits (cuz they are a small business with no expenses).

If that doesn't clear things up, please specify what part you're having an issue with.

I'm trying to remain open to this information and I am continuing to read what you gave me. But just... Any way you spin it, a company as successful as Amazon paying their full time employees as badly as the fact that they need to go on welfare to me is simply unacceptable. I'm willing to change my mind on the "why" they choose to pay them so poorly, but I doubt I'll be be okay with the fact that they DO pay them that poorly.

#11047 We can all agree it'd be nice if people made more money (that corresponded to a real increase in their standard of living, not just because the government doubled the amount of money in existence). But before being upset about problems in the world, it's important to understand *what is at fault*, and which policies will make the situation better or worse. The capitalist view on minimum wage is that *it harms most of the people it's intended to help* – that is, it's counter productive. Another capitalist view is that poverty is not caused by capitalism and *preceded* capitalism. Poverty was *inherited* by capitalism, and capitalism has done a lot to fix it but unfortunately has not fully fixed it yet – and is being heavily hampered from fixing it by the New Deal and other economic interventionist policies. Understanding some economics helps clarify these matters.

If economics works how I think, then it means the correct solutions to problems like these are different than if economics works a different way. So it's important to set aside the world's current problems for a bit and try to understand the right way to think about these kinds of problems first.

> #11048 Do you agree that Tucker has made any Marxist error? If so, did you miss it before or you didn't think it was worth mentioning or what?

at the moment i wrote my initial stuff i was focused on replying to the discord chat participant and not on directly engaging with the Tucker stuff.

i hadn't even watched most of the tucker vid until now. having seen it, i found it anti-capitalist. the whole bit about how those rich dudes should say "thank you" to taxpayers was gross. as if the successful business owners owe the govt/people thanks for confiscating and destroying wealth. disgusting.

btw I find it interesting that people get mad about workers qualifying for e.g. food stamps while working for big businesses, but not that big businesses make money directly off the food stamps. like amazon accepts EBT. bezos is wealthy. why not complain about that? but way fewer people complain about amazon charging food stamps recipients "too much" then they do about amazon paying food stamp recipients "too little." I guess part of it is cuz prices for goods aren't wrapped up in mistaken ideas about dignity etc in the same that prices for labor are. if amazon charges "too much" for a box of cheerios people think of that as just a bad deal. if they pay "too little" for labor that's a crime against the dignity of the poor and a representation of the institutional injustice at the heart of the capitalist system!!

> And you didn't answer this question: Do you agree that Tucker has made any Marxist error?

yes i agree. i saw Tucker's error initially as just more generally anti-big-business/wealthy people and not specifically Marxism. but the idea that amazon would necessarily pay its workers enough to eat if not for food stamps does seem Marxist.

> #11048 Have you or anyone else done any kind of detailed analysis of the different kinds of welfare and how much effect they have?

I haven't. I bet there's research vaguely on the general topic area but I don't know of any offhand that's any good.

> Note that lots of companies don't want to hire people who don't want to be there. Food stamps has some looking-for-work kinda requirements (that you can get out of if you want to), but I wouldn't expect Amazon to be one of the places that takes workers who are only there b/c they would be denied welfare if they refused a job.

Would Amazon have to itself directly hire the most marginal employee(s) brought into the labor market by the govt "workfare" in order to get any benefit?

Toy example: Imagine a labor market where people work at Amazon warehouse or Dollar Tree store. Amazon has higher hiring standards than Dollar Tree and pays a bit more. But some people who could work at Amazon choose Dollar Tree instead for various reasons (its more chill, they like interacting with customers, its closer to their kid's school, whatever).

Govt implements a workfare program. More marginal labor comes on the market. Dollar Tree is the hirer of last resort in this example, so it hires some of the new labor and can pay a lower wage. Some of the Amazon-work-capable Dollar Tree employees reconsider their employment situation and apply at Amazon cuz the new Dollar Tree wage is too low for them. So now Amazon faces an expanded labor pool and can pay a lower wage too.

>Amazon warehouses are *also* complained about, in other articles, for the fast paced work – so I don't think Amazon hires the dregs of society, I think they hire reasonably hard working people.

> So there are companies who get to hire someone at a low wage because they made the offer and the person was required to accept the job offer or else lose food stamps. But, without looking it up, I am skeptical that Amazon is one of those companies.

Interesting.

What about when Amazon does mass seasonal hiring? Do you think they can be picky and only hire pretty high quality people?

I saw an article that said they hired 15k people in Britain alone seasonally and this was a few years ago. That seemed like a lot to me and that's just one country. So it seems to me that they'd be hiring from the general market for unskilled labor.

> If you want to say Amazon is gaining from various welfare programs, I think you should do serious analysis of which ones and by what mechanisms.

Do you disagree with the point about a govt subsidy for people who work bringing more labor into the market? Or do you think Amazon's high standards in hiring policies cause it to not be benefitted?

> PS Part of the reason Amazon has employees on food stamps is they don't want to kick you off food stamps the moment you make enough money to feed yourself. They intentionally set the limits to get more than $0 from food stamps high enough to try to lessen the impact of a welfare cliff where you instantly lose all government help when you get a job. So the leftist propaganda articles are totally wrong to assume that a person getting food stamp money would be unable to feed themselves without the government's help. The government intentionally provides food stamps to people that it knows could afford their own food. I checked and it's possible to get food stamps while making over 50k (they lower the amount the closer you get to the cap, but the complaints about people on food stamps ignore what amount of money they are getting from food stamps). After looking at food stamp requirements a bit, I'm convinced there are tons of eligible Amazon employees who don't apply.

100% agree with all of this paragraph.

I might as well think out loud about what I read there.

I think it makes sense logically but it is a theory and I don't know how it would work in practice. It assumes for example that a company could not afford to pay someone poorly because competition would make it unaffordable.

But what about in situations where there is no competition, going back to Amazon here. Being the only game in town I feel like the theory doesn't hold when employees have almost no choice.

Also, if employees are paid based on productivity, why has an increase in productivity not yielded an increase in pay in a similar manner:

https://www.epi.org/productivity-pay-gap/

So that's where I stand for now.

> Would Amazon have to itself directly hire the most marginal employee(s) brought into the labor market by the govt "workfare" in order to get any benefit?

No.

> Do you disagree with the point about a govt subsidy for people who work bringing more labor into the market? Or do you think Amazon's high standards in hiring policies cause it to not be benefitted?

By default, handouts raise wages rather than reducing wages. You seem to agree. (Whereas the Marxist view is that handouts lower the amount of pay needed for a worker to reach minimum subsistence, and thereby reduce wages, because Marxists do not believe that wages are set by supply and demand.)

Some handouts have work requirements which typically have lots of exceptions (so if you really want to avoid work and still get the benefits, you often can), and which often provide considerably more direct benefit to some employers than others (and i suspect amazon of being in the less direct benefit category, and i doubt amazon's seasonal hiring is especially compatible with how the government rules are set up that are trying to get people into long term work). Broadly, yes, handouts that are tied to having to work are capable of lowering rather than raising wages.

I'm not convinced that, *on the whole*, welfare policies lower the wages of amazon employees. I still suspect they may raise them.

This comes with the caveat that we're only looking at the consequences of the handouts as if they grew on trees (without causing any inflation), rather than coming from economy-harming taxes. Overall the government clearly lowers wages with its economic interventionism, but looking narrowly only at the consequences of handing out various welfare, you and Tucker have not convinced me that currently the welfare programs in existence in the US lower wages on average (either in the economy as a whole, or for what Amazon pays its US employees.) Since the default effect of welfare is to raise wages by lowering the demand for wage income, I suspect that raising wages is also the overall, average effect (even though, as you say, some pieces of welfare do work the other way due to their special rules – i'm just not convinced those are the majority of the effect.)

> So it seems to me that they'd be hiring from the general market for unskilled labor.

Yes but that doesn't mean they are taking the people who will only work if told they'd be denied food stamps for refusing. You can hire from the general market for unskilled labor and still read resumes and screen people some.

If someone comes in (in the late afternoon, in sloppy clothes) and says "hey, can you sign this government form that says i applied to work here, so that i can keep getting welfare? and btw here's my [crumpled] resume." would you hire them? there exist companies that would hire that person, but it's certainly possible to hire unskilled labor but not want to hire that particular person. my guess is amazon wouldn't want that guy in their warehouse, who clearly doesn't want the job, even during the busy season. even if amazon could hire that guy for e.g. 20% less, he'd probably work 30% slower while having an elevated rate of sending the wrong items to customers or causing other problems...

> I don't know if exactly false but for example I am not entirely convinced that people are paid by their productivity. Just imagine being a business owner, if my entire goal is to make as much profit, which correct me if I'm wrong is the most common goal of most business, I am going to pay the least possible amount to my employees.

It said people are paid by supply and demand, not by productivity. (Demand and productivity are related to each other). It said wages are set in an auction and it's in the interests of business owners to set wages high enough to avoid a labor shortage (shortage = demand exceeds supply at current price, so buyers aren't able to buy what they want to buy). Does that make sense to you?

Reisman explained that, when business owners follow their self-interest, they will outbid other buyers of what they want to buy. That is the least they can pay, because if they pay less then they won't be able to hire those workers. On the high side, they will (approximately) stop bidding if the price of labor reaches the point that their profits would drop below the average rate of profit in the economic system.

Understanding how prices are set is one of the key issues here, including, especially, how they are set in an idealized hypothetical. Then one can look at how real situations change pricing. The starting point of understanding free market pricing is that the price of labor is set to create full employment with no labor shortage – no more and no less. Full employment is where all the supply is being used, and no labor shortage means there is no unsatisfied demand at the current price.

---

Regarding inflation, I guess you're unfamiliar with the numbers, so you don't know the ballpark of the size of the correction they made. Here's an inflation calculator. I don't know what they used but these kinds of numbers are common.

https://www.usinflationcalculator.com

It says inflation from 1973 to 2017 was 452.1%

The EPI link claims real hourly compensation went up 12.4% during that time period.

If inflation was actually lower, it could dramatically change their results, since they think around 97% of the increase in wages was inflation and therefore doesn't count.

In other words, in dollars, someone's wage could have gone from $10/hr to $62/hr and they might report that as a 12.4% increase in wages (after accounting for inflation).

https://www.epi.org/publication/raising-americas-pay/

Raising America’s Pay

Appendix Data

https://www.epi.org/publication/raising-americas-pay-data/

#11066 Do you agree that, in general, in most of the US, there is competition of businessmen for workers? Do you see lack of competition as a special exception that comes up sometimes, or as a common situation?

> I believe I saw that Walmart is the largest employer in the USA. I don't think there is a lot of competition in that department.

There is target, sears, CVS, walgreens, ikea, safeway, trader joe's, costco, etc...? And many of those workers could also work in construction, in a wide variety of retail stores or restaurants, as bus or uber drivers, and many other things, right?

> I can even see them making a deal with their next largest competitor like Target making a deal to keep labor prices low.

I believe that is illegal and would be hard to hide, and I don't think that's the standard, common thing that happens in the US. Further, it wouldn't work because Walmart and Target (and several other large employers), combined, still only do a small fraction of hiring. In the US, Walmart hires around 1.5 million workers out of a total workforce of around 126 million.

#11070 But the owner of Uber is making off with insane amounts of money, and they are only responsible for the application. The workers provide the labor and the parts (their own cars).

>> Well it does depend on where you are right? Some areas won't have all those options.

> Most areas of the US have many employment options, right? That's why I asked about what the common situation is (whether there is competition of businessmen for labor) or not.

Yeah I would say that most areas have employment options.

>> Almost no barrier to entry, no regulation for the most part,

> I don't know why you think ridesharing is unregulated. There are many news stories about regulations which keep it out of cities or otherwise affect it.

Ridesharing is very much unregulated. Some cities like Austin tried to fight them off but ultimately had to give in. We're talking about in general here right? In general the only barrier to entry to work for Uber is having a license and a car.

>> But the owner of Uber is making off with insane amounts of money, and they are only responsible for the application. The workers provide the labor and the parts (their own cars).

> You seem to believe in the Marxian exploitation theory. But let's try to focus on the logic of economics (my question in the first section of this comment).

Maybe. Still this is a good scenario of an unregulated economic business model in which the workers are providing the tools and labor and getting paid less than minimum wage. It does take advantage of the fact that they aren't doing the calculation of money spent on gas/maintenance and care depreciation.

Maybe you don't like the word exploitation but this is a very raw deal for the worker. They are getting paid less than minimum wage in this scenario, it doesn't seem to be improving on its own.

> Yeah I would say that most areas have employment options.

OK, so we can agree there is competition by businessmen for workers in the US in general, as the typical situation? And that therefore our initial expectation should be that wages will be set by supply and demand, like an auction where employers bid against each other. Right?

And so, then, what will a federal minimum wage law do, which affects the whole country rather than just some specific locations or industries?

PS FYI even in a case where there is only one employer available, he can't just pay workers $1/hour. The reason is he has to compete against two things. First, workers can work for themselves instead of for him, and can thereby produce more than $1/hour. Second, workers can become businessmen themselves, and it's rather easy to run a business successfully and make a profit when the price of labor is very low. Only a higher price of labor will make it harder for others to start businesses and outbid the current employer for workers. Wages will still, even with no competition of other businessmen, not be set in relation to minimum subsistence, but in relation to these two types of potential competition. But what if no one has the initiative to start a new business, and someone is not able to be self-employed and produce minimum subsistence? Then, OK, an employer might actually offer him a minimum subsistence wage. What will he think of that? He will be thrilled that this employer exist and has saved him from death by starvation, which would have been his fate without the help of this businessman.

#11076 You need to understand the theory better before trying to analyze a case like ridesharing.

> I guess in theory, Well it would make it so employers can't underbid for labor

Could they underbid for labor without minimum wage? Wouldn't that just mean being outbid and losing labor to other employers?

> but it will also make it so that certain labor that is worth less than the minimum wage would be unhirable, or hirable at less profit by the business.

If the labor is worth less than the minimum wage, then in general it not be hirable at all – the business would take a loss by hiring it. Right?

So the basic effect of this minimum wage law would be to cause unemployment and to reduce production (which hurts everyone, including high wage workers), right? Meanwhile a small minority of lucky workers will have their wages increased a little – but they could very easily be worse off, too, because there are fewer good and services being produced for them to buy.

> Well hold on if, if the business can afford to pay them above that minimum wage and make a profit (but smaller) then no they would not take a loss

Either they are worth more than the minimum wage to the business, or else the business would take a loss on hiring them relative to not hiring them. Businesses will not hire people (unless forced to) who produce less value for the business than they cost the business, even if they would still be profitable overall due to their other activities. Doing that would be charity (which some people might voluntarily do, but let's focus on the economic logic of what self-interested actors do).

Make sense?

> Hmm. I think this would mean some people are going to be unhirable and some businesses are going to go out of business because they can't hire those people.

Yes.

> I think logic follows that this would be the case.

Great. Do you also understand how the free market pricing of labor creates full employment?

If the price of labor is too high (as minimum wage laws force), then there is inadequate demand for labor at that wage rate, and some people are unemployed. But the free market doesn't do that, on its own, because self-interested businessmen would prefer to pay lower wages and hire more people.

And if the price of labor is too low, then there is a labor shortage so self-interested businessmen bid it back up.

So the market price for labor is the same price that provides full employment. Do you agree? That's why a government law changing the price of labor causes problems. It's making the price not be this equilibrium of full employment. Either government intervention causes unemployment (if the price is too high due to a price floor) or labor shortages (if it's a price ceiling which is too low). Labor shortages are bad too (we could go into why they suck, but it's maybe unnecessary because no one is advocating maximum wages for workers in general, though some people do advocate it for some positions like CEO).

> Yes but This would require transparency I am not sure is possible I think. Both the employer and the employee need to know what the value of a particular labor market is, As an employee I would have to know what everyone doing my job is getting paid no?

If you suspect an employer is lowballing you with a salary offer, you can ask other workers what they're paid (this info is now publicly available online in many cases), and/or you can apply for multiple jobs. However, this is often unnecessary because the people doing the hiring have a pretty good idea of what the market price is and have a corporate policy to make fair offers because otherwise they would lose out on potential employees who apply at other businesses and get a better offer elsewhere.

The employer also needs to estimate in advance how much value an employee can bring to the table. This can be hard for new businesses doing new things, so mistakes get made, but for established businesses they have a pretty good idea of how much additional sales they can generate by e.g. hiring another guy to do a particular task in their factory. It's harder with knowledge workers because the quality of their work varies much more than with non-knowledge workers. Even with non-knowledge workers, some are more diligent than others, which is hard to communicate during the hiring process, so they may need to negotiate for a raise after proving their worth.

So I think this can – and often does – work out fine to a reasonable approximation. I'm also aware that many people in software are underpaid due to bad salary negotiation skills and some other errors. I think that's generally less of a problem in lower skilled work where wages are more standardized, but it does affect those workers too (women being less effective at salary negotiation on average is, sadly, one of the causes of the gender pay gap – but that is different than sexism). People who want to solve this problem would be well advised to consult resources like https://www.iwillteachyoutoberich.com but many of them choose not to and consequently make less money than they could.

> Yes with some assumptions I am not entirely sure are possible.

Setting aside the world today, do you think the assumptions are *approximately* possible, or that nothing very similar could be possible IRL in any human society?

#11082 Ok and do you agree about the first part of #11081 ?

OK, great. I think we should go through a more detailed scenario to review the economics more and see if we're on the same page yet. I am currently making educational content related to Reisman's book, (mostly videos), so I'm pasting below a scenario with questions. Please take your time thinking it through and considering the questions carefully.

After that, if it goes well, I expect that the next step could be to consider some kinds of reasons (like circumstances being different in some way) that minimum wage would have a different effect than the one we discussed above about it causing unemployment and lowering production. I have in mind theoretical reasons or simplified, hypothetical examples, not real world cases. That way we can try to focus on one factor at a time and its consequences.

# Scenario

Let's examine a hypothetical scenario. There are 20 businesses. They currently have no employees, but they have the factory floor space and tools to hire up to 100 workers each (and they won't expand). There are 800 workers available to take jobs. All work is unskilled – any worker can do any job. All jobs have the same number of hours and equally good working conditions. Workers must make $25/hour or more to have a good standard of living in the society, and $1/hour or more for minimum subsistence. The average rate of profit is 5%/year, so any use of capital with a lower return is inefficient and the capital could be more gainfully used elsewhere (basically you'd be better off investing in stocks and bonds rather than in the business). The business owners take salaries so that we don't need to worry about any return for their work, all profits of a business are a return on capital.

As a further simplification, the rate of return on capital from each business is unaffected by the number of workers employed, it only depends on the hourly wage paid – but, nevertheless, each business wants to hire as many workers as possible (up to 100 max) as long as the hourly wage is low enough to get 5%/year profit or more. Additionally, the capital in the businesses is totally liquid – it can instantly be converted into stocks and bonds, or back into a business, for free. Also, everyone lives in the same town and has the same commute to every business, and every worker knows about the job openings at every business, and every business knows about all the available workers.

All the workers are equally productive, but the businesses are not equally productive. Some businesses use workers and capital in better ways to create more valuable products. We'll rank them from 1-20. The best one, #1, can pay workers up to $100/hour and still make a profit of 5%/year on the capital invested in the business. The #2 business can only pay $95/hour, at most, in order to have a profit of 5% or more. The #3 business can only pay $90/hour for workers or else its capital would be better invested in stocks and bonds. And it keeps going down by $5/hour for each business, until the 20th business can only pay up to $5/hour for labor and still make a 5% profit per year.

All the employers are selfish and greedy individually, but they don't form a cartel or a conspiracy of employers, they just act in their own interests without coordinating with other employers. They try to pay the lowest wages they can and to maximize their profits. And the workers try to get the best wages they can, but they don't unionize, they just act as individuals.

# Questions

What optimally happens in a free market, and why? How many workers are hired by which businesses, and what are their wages? What is the unemployment rate? In what ways does *worker need* matter (like the minimum wages needed for a good standard of living, or for minimum subsistence)? In what ways does employer greed matter?

A new business is created. It's able to offer wages of up to $25/hour for up to 100 workers. What affect does this have on wage rates and how many workers work at each business?

Another new business is created. This businessman invented a really great new product which is easy to make. He's able to offer wages of up to $500/hour for up to 100 workers while still making a 5% return on his capital or higher. What affect does this have on wage rates and how many workers work at each business?

What happens if another 200 workers enter or exit the situation?

What if the #1 business expanded in size and could now hire up to 400 workers instead of 100? What if the #20 business also expanded to be able to hire up to 400 workers?

In the original scenario, what happens if the government passes a minimum wage law of $25/hour? What about a minimum wage law of $80/hour?

Can you figure out, specifically, which businesses would hire the 800 workers and what wages each business would pay each worker that it hires?

> Business 6-8 Would go out of business because they can't afford to pay them that much. 300 of the workers would be unemployed.

Yes.

> Nothing. The top 8 business are paying them already more because there is a labor shortage.

Yes, except your terminology is not the way economists talk. In economist jargon, a shortage refers to a situation where there isn't enough of something available at the current price to satisfy the demand. If all the workers are hired at wages which are higher than the other 12 businesses would want to pay, then there's no additional demand for labor and therefore no "shortage".

Shortages are avoidable, and contrast with scarcity, which is unavoidable and means that there isn't unlimited of something. Scarcity means there's more demand at a price of $0 or more than the supply. For example, beachfront homes are scarce (more people would take them for free than the number of beachfront homes that exist), but if the prices of beachfront homes are high enough then there may not be a shortage (everyone who wants to buy one at the current price may have one). It's the same with bread: it's scarce, but there isn't a shortage – i can reliably go to the store and buy bread at the market price, rather than finding the shelves empty.

#11088 This is incorrect.

The top 8 businesses would all pay $61/hour (or $60.01 if you want to use cents and the numbers are exact to the penny), because at that price the bottom 12 businesses will drop out of the market – they aren't willing to hire anyone at that price. The #1 business doesn't need to pay more than $61/hr to get 100 workers. Businesses only have to pay just enough to lower the demand for labor enough to avoid a labor shortage. The top business doesn't need to pay $96/hr b/c it doesn't need to exclude the #2 business from hiring people.

Make sense?

#11090 Great. Can you try some of the questions again then?

With the new $500/hr max bid business, what does the wage rage become for everyone?

With 200 workers entering or leaving, what is the effect on wages?

When the #1 business expands to 400 workers instead of 100, what is the effect on wages?

#11092

> What do you mean? Like maximum amount someone can bid for labor or a new business that can afford to pay that much

I meant the example above:

>> Another new business is created. This businessman invented a really great new product which is easy to make. He's able to offer wages of up to $500/hour for up to 100 workers while still making a 5% return on his capital or higher. What affect does this have on wage rates and how many workers work at each business?

Then what do wages become?

---

The rest are correct except expanding to 400 workers means 300 additional workers, so your math is a little off, but I think you get the concept.

#11094 Yes. OK, backing up I had a concern about this:

>> What if the #20 business also expanded to be able to hire up to 400 workers?

> Rank 20 can't pay their workers enough to keep them, being able to hire 2x presumably means they could pay the initial 100 2x the wages, but it still below 8th rank business.

The math is off (400 workers is 4x) but that's minor. Let's just say it was 200 workers.

The issue is that ability for a business to expand (hire more workers at the same wages) and ability to pay higher wages are *very different*.

Expanding to more workers requires having more machinery or tools or office space or being able to buy additional supplies of iron or CPUs or other components from one's suppliers (or finding new suppliers).

Raising the max wages a business is willing to offer requires being able to generate more sales revenue per worker.

Being able to hire double the people does not mean it could hire half the people at double the wages. It needs the production of the additional people to bring in more sales revenue to be able to afford them.

When a business expands, the basic idea is it hires people to make more stuff it can sell. It's in a position to hire someone at $50/hr who can produce 5 widgets per hour using $10 of capital goods (materials and also wear and tear on machinery and tools), and it can sell widgets for more a bit more than $12 (enough to have a good enough rate of profit on the investment in the capital goods that worker is using). That way, the worker is paying for himself (5 widgets sold for $12 each is $60, enough to pay for his hour of work plus the capital goods he used during that hour) plus a bit extra. But if a business can afford to hire new people like that, it does *not* mean it could pay its existing employees more (unless they were somehow going to start producing twice as much...).

Make sense?

#11096 Great. I think the scenario went well.

So, next step, I suggest you try to come up with ways the this kind of economic logic would not apply. What kind of situations would change things, and then what would the effects be?

Try to come up with *one factor* at a time, so it'll be easier to analyze what effects it has.

Try to come up with factors which would somehow make a minimum wage law have a good outcome, if you can. We could discuss other kinds of factors instead if you want.

You can look at real world scenarios or research for inspiration, if you think they're useful. But then try to figure out what the factors are which are causing the issues, and then bring up one of them at a time in a simplified scenario like the one we've just talked about or another simple scenario.

If you get stuck, you could give a real world example and I could help you figure out what some of the factors in it are. But I think it'd be best if you could come up with some yourself since the goal is to address *your* objections to the laissez faire capitalist view.

#11098 Also, on top of that, as Reisman would point out, the employed workers may have to pay taxes to provide some welfare for the 300 people who are prevented from working.

The first factor I see is much higher supply of labor. So I'll start there. Take the scenario with 20 companies but raise the number of workers from 800 to 500,000. What happens?

Wages drop to, let's say, $1/hr, and 2000 people are hired. We could set wages considerably higher if we suppose people have options like being self-employed, starting a business, or moving to another town, and any of those options could be more attractive than $1/hr wages (which are minimum subsistence). But for now let's just say $1/hr. And there are 498,000 people who are unemployed. Prices fall since demand for products has fallen (in terms of money – people are only willing to pay low prices for stuff cuz that's all they have). But, whatever prices are, and whatever may be taxed and used for welfare, the production of the 2000 employed people is not able to do a good job of supporting the 498,000 unemployed people.

So, question: Will a minimum wage law help with this situation? What will its effects be?

I think what would actually help is mainly more capitalism – businesses expanding, new businesses being created, people being self-employed. A minimum wage law will not encourage this – it will make business expansions and new businesses more difficult because it's easier to start a business that can pay up to $2/hr for labor than one that can pay a minimum wage of $5/hr for labor. And a minimum wage law that applied to self-employment – you can't be self-employed unless you can make $5/hr or more for yourself – would also be bad for similar reasons.

I should mention that I don't think the solution is minimum wage for these issues. I am just thinking about some IRL scenarios in where there is a disconnect from the theory presented.

Oh I get a little scattered sometimes. No I was in agreement with you about the scenario of low competition. I can't think, based on the logic we laid out, of a way that creating an artificial minimum wage would not end up screwing those that need it the most in the end.

I was hoping to start analyzing some scenarios in where the empirical data shows the opposite of what the theory suggests and see if it's the theory or if I am missing something.

Unless, you want to keep working with more scenarios I am enjoying the exercise either way.

> OK let's try this. Say there's only one company, the other 19 disappear. It's the one that can pay up to $50/hr and still make enough profit. It hires 100 people, and 700 people have no jobs.

> *Maybe* the following happens: The wages it pays are $1/hr, and a minimum wage law set at up to $50/hr would help the workers. The minimum wage law wouldn't increase production (same amount of stuff to go around if they are the only town in existence), but it'd give them more money to buy things produced by other workers from other towns.

> So then do you think minimum wage would be good, or do you see problems with it? Either way, do you have any ideas besides minimum wage for what things would help in this scenario? And what things besides minimum wage could increase wages above $1/hr?

Ok well I would think that this minimum wage would be good assuming that:

-The workers or someone can't create their own company that pays better

-Moving out of that area is impractical or impossible

-This is the only source of income

But the minimum wage would interfere if a new company wants to move in and hire another 100 workers but can only do it for less than $50. So if i see that company 1 is only paying $1/hour, I'd be willing to start a business even though I am inefficient and pay idk lets say $12/hour. This would be impossible for me if a minimum wage exists.

Some better options. If at all possible make it so new business can enter the scenario to create more wealth and jobs.

Maybe create an incentive for the business to pay their workers more. Perhaps a tax on a certain level of profit that would encourage the business to instead give that money to their employees.

Nothing particularly optimal but that wouldnt help the other 900. I guess some sort of charity system to have the 900 not die of starvation. Dunno how.

So far so good. Yes.

> OK so I guess you don't think a minimum wage is good in these scenarios, right? But you still think it might be good for Uber drivers and some other cases? If so, what are some other aspects of the Uber situation (or Walmart or whatever) that you think could be relevant?

I don't think a minimum wage on Uber is going to fix the problem there. Hypothetically more competition would help but the barrier to entry at this point seems quite high. I mean Lyft is their next competitor and they are nowhere near as popular. I don't know what could be done in this scenario to be honest.

I will answer the other 2 paragraphs when I am less tired. I am heading out for the day.

#11112 There are many crucial IRL factors we haven't talked about so far, like the 500,000 ways our governments have come up with to prevent the formation of new businesses and make existing businesses have much lower max $/hr they can pay.

Going through some of the common sorts of government regulation, and what kinda harm they do, could be informative. It's not like humanity just exited our thousands of years of extreme poverty. The industrial revolution was long enough ago that things could be significantly better by now compared to how they are. Did you read the extra couple Reisman sections about laws to improve working conditions? If not, I'd suggest that now.

> I don't think a minimum wage on Uber is going to fix the problem there. Hypothetically more competition would help but the barrier to entry at this point seems quite high. I mean Lyft is their next competitor and they are nowhere near as popular. I don't know what could be done in this scenario to be honest.

I think it's important to get something clear in your mind. Uber competes in two different ways. It competes for customers and for employees. Which is the one that concerns you?

As a *customer* of Uber, I have other options: Lyft, taxis, the bus and other public transit, walking, biking, rental cars (including newer stuff like zipcar), getting a friend to give me a ride, doing more stuff online (facetime, getting things delivered) instead of traveling places, or owning my own car. So there's a lot of options for Uber to compete with. Lyft is not the only major competitor here. I've got options, and Uber didn't take any options away from me (except I think maybe it did lower the availability of taxis, cuz it basically does the same thing at a lower price). If Uber doubled their prices, as a customer I'd use them less and use alternatives more – I wouldn't just be stuck paying the higher prices.

As a potential *employee* of Uber, I have many other options for less skilled work. I could work at McDonalds, Walmart, FedEx, etc. Lyft is not the only major competitor here, either.

The primary reason that people drive for Uber is that it helps people relative to not driving for Uber, in their opinion. That's why many Uber drivers stick around. They consider it a better option than their alternatives. You think they are stupid, but you're mistaken to judge these people in this way. Some may be mistaken. If you wish to help them, you could sell them a guide to help them understand the issues better, or give it away charitably. If a large number of people are making a large mistake, there is room for you to help them at a substantial profit. But I think you just wish the situation were better (that people had better options), which is different than driving for Uber being a mistake.

You may think people can't math, but lots of these people don't have much savings either, so if Uber wasn't paying their rent, gas and grocery bills they would in fact quit (for the full time drivers – a lot of people appreciate the part time work and flexible hours, which they only do because they see it's enabling them to buy things they would not otherwise have been able to buy).

The secondary reason people drive for Uber is there aren't enough jobs due to many thousands of anti-capitalist government policies that are preventing full employment – like the minimum wage. The overall economic situation would be dramatically improved by changes to government.

The main purposes of *unions* are to push for higher wages and better working conditions, so they work a lot like minimum wage laws. Similarly, regulations requiring Uber give out benefits would simply lower salaries by the cost of the benefits and not help workers – unless you also use a minimum wage law in order to prevent the lowering of salaries (or unless you exempt Uber's competitors from having to give benefits, so Uber can't lower salaries and stay competitive).

What regulations do you think would be good to have regarding Uber?

https://www.nakedcapitalism.com/2016/11/can-uber-ever-deliver-part-one-understanding-ubers-bleak-operating-economics.html

> Published financial data shows that Uber is losing more money than any startup in history and that its ability to capture customers and drivers from incumbent operators is entirely due to $2 billion in annual investor subsidies.

In other words, some rich investors are pouring tons of money into Uber, which mostly goes to subsidizing a mix of 1) cheap rides for customers; and 2) driver pay.

> for the year ending September 2015, Uber had GAAP losses of $2 billion on revenue of $1.4 billion, a negative 143% profit margin.

Jesus.

If you want to say Travis Kalanick got rich by scamming foolish investors ... maybe, the jury is still out on that. I wouldn't care very much if he did. When rich people make bad financial decisions, that's totally on them. (As opposed to bitcoin which has been scamming lots of foolish regular people, which is an awful shame.) I have nothing against rich people, I just think they should be held responsible for what they do with their money and that they have the resources that they shouldn't be making excuses for bad decisions, and if they do make bad decisions they shouldn't be rich (large wealth should be in the hands of people who make good financial decisions). I think it's fine when foolish rich people become less rich (they were the wrong people to control a fortune), but i don't like to see foolish middle or lower class people becoming worse off (foolish people who do productive work can totally still merit having a regular amount of wealth).

> The primary reason that people drive for Uber is that it helps people relative to not driving for Uber, in their opinion. That's why many Uber drivers stick around. They consider it a better option than their alternatives. You think they are stupid, but you're mistaken to judge these people in this way. Some may be mistaken. If you wish to help them, you could sell them a guide to help them understand the issues better, or give it away charitably. If a large number of people are making a large mistake, there is room for you to help them at a substantial profit. But I think you just wish the situation were better (that people had better options), which is different than driving for Uber being a mistake.

That's not a bad idea I should try to put up something out there to help people realize if they are making or losing money by driving for Uber. Would at least help someone out there.

But overall I do wish there were better options.

> You may think people can't math, but lots of these people don't have much savings either, so if Uber wasn't paying their rent, gas and grocery bills they would in fact quit (for the full time drivers – a lot of people appreciate the part time work and flexible hours, which they only do because they see it's enabling them to buy things they would not otherwise have been able to buy).

I understand that.

> The secondary reason people drive for Uber is there aren't enough jobs due to many thousands of anti-capitalist government policies that are preventing full employment – like the minimum wage. The overall economic situation would be dramatically improved by changes to government.

Yes and I am willing to explore those policies etc...

> The main purposes of *unions* are to push for higher wages and better working conditions, so they work a lot like minimum wage laws. Similarly, regulations requiring Uber give out benefits would simply lower salaries by the cost of the benefits and not help workers – unless you also use a minimum wage law in order to prevent the lowering of salaries (or unless you exempt Uber's competitors from having to give benefits, so Uber can't lower salaries and stay competitive).

> What regulations do you think would be good to have regarding Uber?

I honestly don't know. I don't know if there is a way to incentivize a company to after they are making a certain profit start reinvesting in their employees somehow. It is hard for me to see a minimum wage working anymore.

Something is definitely fucked with Uber though like, it just does not even make any sense.

> I honestly don't know. I don't know if there is a way to incentivize a company to after they are making a certain profit start reinvesting in their employees somehow. It is hard for me to see a minimum wage working anymore.

In general, it's bad to want money to go to people who didn't earn that money. If an employee for FooCorp is totally interchangeable with an employee somewhere else, he shouldn't earn extra money just because the CEO of FooCorp is brilliant.

If you want high profits to be curtailed, you're taking away the incentive to make risky career decisions to try to achieve high profits, and the incentive for investors to invest in those kinds of companies. Also, there's no way to achieve it other than by persuading people with words, or by using force. And you're not going to be able to persuade the brilliant CEO/founder/majority-owner of FooCorp that his workers who do job X exactly as well as the workers at BarCorp should be given extra money when there are far more worthy *charity* causes that he could instead direct money to. He will consider a better charity or non-charity uses.

> Surely there is a way to help, problems are soluble right?

There are lots of ways to help people, including at a profit. Furthermore, there are lots of ways to prioritize where to direct help. In general, *productive expenditures* make everyone richer in the long run, whereas charity typically is used for consumption in the short term. And the people who invest in the future are, largely, rich people and businessmen, so it's important they have money to do more of that.

Bill Gates has used his money poorly, he has bad philosophy and doesn't know how to be effective with charity, which is typical (he's not especially bad). A common way money is used badly is as a bandaid for problems caused by underlying political problems that need to be solved or else you're just pouring water (money) into a leaky bucket (bad system).

> Also if we get more money in the hands of people who need to spend it, would that not boost the economy

This is the broken window fallacy – it's focusing on how the window repair guy will get money and ignoring that the money would otherwise be used for something else.

> more than say a Billionaire buying his third Yacht?

Apart from what they give away to charity, billionaires spend the vast majority of the of their money on *capital goods*, not consumer's goods like bread or yachts. A billionaire buying his third yacht is an anti-capitalist straw man with far more application to actors and sports stars than to CEOs and founders.

> I agree that we should reward brilliance (and discourage rent seekers) but you know the cure for Cancer could be in the brain of a young man whose parents might not be able to keep a roof over their heads.

Charity to help the best and brightest is my favorite kind (and Rand's), though I think current scholarship programs largely do a poor job of identifying who to help or figuring out good ways to help them. Poverty is not the primary thing that screws up the potential of the smartest people in the US. It's that they despair after they discover all their teachers, parents and peers are irrational, nasty and dishonest. (Or, before that, it's that their parents hurt them during the first few years of their lives.)

> and it's unclear to me that we did benefit from the NASA's tax funding relative to what could have been done with that wealth instead but wasn't.

We had fantastic benefits from the Space program such as MRI's and CatScans for example. GPS, home insulation, smoke detectors, heart pump technology. The list is quite long.

Do you think something as risky with no guarantee of pay off could be privately funded? I have a hard time wrapping my ahead around that happening. This was not a profitable venture, and the incredibly progress made in science and technology was not immediately felt.

Makes me think of the Columbus voyage.

Andy, are you satisfied about minimum wage? Convinced? Done with the topic?

If not, got further questions and objections?

If so, do you see how not everything is about research and sometimes logic and math are goods tool? And got any ideas about what's going on with the pro-minimum-wage "experts" or want to find out?

#11142 There are tons of related issues, and they aren't all about welfare. If you have stocks to sell that have gone up in value, you will be taxed more for this if you have higher income, so there's an incentive there to work less (perhaps temporarily for a limited amount of stock, but long term if you have a lot of stock that gained a lot of value). Or call it a lowered incentive to work more if you want to, but it matters.

#11147 Pick a link and say what you can refute and what part you can't.

#11154 It reads like a foreign language because it's not meant to be understood. If it was understood, people would see it's flaws. It's meant to be dealt with in ways like these:

1) People can accept the conclusions on authority.

2) Activists can cite it and use it as conversational ammo.

3) Someone can translate it to layman's terms.

The translations typically lose most of the details and come out something like this:

https://www.vox.com/cards/minimum-wage-explained/does-the-minimum-wage-cause-unemployment

There are a lack of translations somewhere in the middle: understandable by intelligent laymen while still being substantial, serious content. (This sort of translation is one of the things IDW speakers are very good at either presenting or appearing to present. Correctly or not, having done adequate expert research or not, they do speak of sophisticated ideas while using words that laymen can follow.)

---

In addition to not really trying to be understood, the paper doesn't engage with the literature (by Mises and his predecessors and successors), which it allegedly refutes. It's not trying to help you see where logical economic thinking went wrong. It doesn't explain that. Why not? Because it can't. The authors have no answers to such things. And they don't want to think about it. They don't want to say "That's weird. Our empirical research seems to be in contradiction to logic. We better investigate. Until we figure out the logical mistake in liberal, capitalist economics, we must also be aware that our research could be mistaken. There must be a mistake somewhere and until we find it we don't know what it is."

That project – figuring out where the mistake is (since when ideas contradict there's always at least one mistake) – is the way to make progress. It's the way to pursue truth seeking. The paper authors don't help you with it. They don't want to. They leave that to you because truth seeking isn't what they are doing. They don't aim to do their research, or write their papers, in a way which particularly facilitates truth seeking. This is partly because, if they made truth seeking easier, they would more easily be revealed as intellectual imposters who are mistaken. So they neglect to lay out, step by step, which parts of liberal-capitalist economic logic they think is correct and which parts they suspect of being mistaken and why and how they think the correct and incorrect parts may be separated despite their apparent logical connections. Besides, they can't do that because they are ignorant of liberal-capitalist economics – and they want to stay that way (ignorant), and their peers and employers pressure them to say that way.

---

The paper is basically meaningless because it neglects thousands of *uncontrolled factors*. What it's basically saying (even if it were true) is, "We found that, empirically, *in a set of circumstances we looked at*, some small minimum wage increases didn't increase unemployment by a large amount." I read little of it, but roughly it's saying something in that ballpark. This tells you nothing about what the effects of minimum wage would be in other circumstances, nor does it tell you how stable current circumstances are, nor which aspects of the analyze circumstances are the crucial ones. They think their findings are robust across many circumstances. Let's suppose so. It'd still bet he case that changing one or two key factors would totally change what happens. And they have no idea which factors are key factors, and are doing nothing to find out. Maybe the moment a certain type of government regulation or welfare was abolished, minimum wage would instantly become massively harmful. Who knows? They don't know. And, refraining from logical, economic thinking, they have no way to find out or contribute anything. (I'm extremely doubtful of their actual findings, but the point is that even if they were right it'd still be pretty damn useless. It's the same issue as correlation studies in general: even if the correlation holds today, the study doesn't tell you what changes in circumstances would make the correlation stop holding.)

#11156 These people claim their economic policies aren't causing unemployment, while also being well aware that *we have unemployment*. Measuring the amount of unemployment may be hard, but it's uncontroversial that there are quite a few unemployed people who want to work. Do they not realize that *something* must be causing this unemployment? Do they just think unemployment is natural and inevitable, in total contradiction to the logic of how the price of labor is set by supply and demand in a free market? A person who thinks unemployment is inevitable and to be expected and accepted ... is a bad person to do a study on whether minimum wage causes unemployment.

> Even if the measure of unemployment is flawed. Would the base change still no matter. So let's say that unemployment is at 10% before the minimum wage increase. It then remains at 10% post minimum wage increase.

Suppose that were true – that for some reason, in current circumstances, minimum wage laws (that are semi-low limits) don't cause much additional unemployment. It would tell you nothing about which factors made it true, and nothing about what changes to society (which might happen any day now) would make it stop being true.

*Logic and philosophy are not empirically falsifiable and are not supposed to be.* Not everything is a scientific issue, and no issues are pure science (making scientific claims always involves some philosophy of science, too).

#11168 With criticisms, as always. Whether or not the criticisms mention data, criticism is always the method of making intellectual progress.

https://twitter.com/JonathanTurley/status/1041900047800123393

> Venezuela’s Maduro Orders 3,500 Percent Increase in Minimum Wage … 40 Percent of Businesses Close

_Bureaucracy_ by Ludwig von Mises, 1944:

> For under government interference with business the unity of government policies has long since disintegrated into badly coördinated parts. Gone are the days when it was still possible to speak of a government’s policy. Today in most countries each department follows its own course, working against the endeavors of the other departments. The department of labor aims at higher wage rates and at lower living costs. But the same administration’s department of agriculture aims at higher food prices, and the department of commerce tries to raise domestic commodity prices by tariffs. One department fights against monopoly, but other departments are eager to bring about—by tariffs, patents, and other means—the conditions required for the building of monopolistic restraint. And each department refers to the expert opinion of those specialized in their respective fields.

>

> Thus the students no longer receive an initiation into economics. They learn incoherent and disconnected facts about various government measures thwarting one another. Their doctor’s theses and their graduate research work deal not with economics but with various topics of economic history and various instances of government interference with business. Such detailed and well-documented statistical studies of the conditions of the immediate past (mistakenly often labeled studies about “present-day” conditions) are of great value for the future historian. They are no less important for the vocational tasks of lawyers and office clerks. But they are certainly not a substitute for the lack of instruction in economics. It is amazing that Stresemann’s doctoral thesis dealt with the conditions of the bottled-beer trade in Berlin. Under the conditions of the German university curriculum this meant that he devoted a considerable part of his university work to the study of the marketing of beer and of the drinking habits of the population. This was the intellectual equipment that the glorified German university system gave to a man who later acted as the Reich’s chancellor in the most critical years of German history.

>

> After the old professors who had got their chairs in the short flowering of German liberalism had died, it became impossible to hear anything about economics at the universities of the Reich. There were no longer any German economists, and the books of foreign economists could not be found in the libraries of the university seminars. The social scientists did not follow the example of the professors of theology who acquainted their students with the tenets and dogmas of other churches and sects and with the philosophy of atheism because they were eager to refute the creeds they deemed heretical. All that the students of the social sciences learned from their teachers was that economics is a spurious science and that the so-called economists are, as Marx said, sycophantic apologists of the unfair class interests of bourgeois exploiters, ready to sell the people to big business and finance capital.3 The graduates left the universities convinced advocates of totalitarianism either of the Nazi variety or of the Marxian brand.

>

> Conditions in other countries were similar. The most eminent establishment of French learning was the Ecole Normale Supérieure in Paris; its graduates filled the most important posts in public administration, politics and higher education. This school was dominated by Marxians and other supporters of full government control. In Russia the Imperial Government did not admit to a university chair anybody suspected of the liberal ideas of “Western” economics. But, on the other hand, it appointed many Marxians of the “loyal” wing of Marxism, i.e., those who kept out of the way of the revolutionary fanatics. Thus the Czars themselves contributed to the later triumph of Marxism.

>

> European totalitarianism is an upshot of bureaucracy’s preëminence in the field of education. The universities paved the way for the dictators.

Free book download:

https://mises.org/library/bureaucracy

*David Friedman* (son of Milton Friedman) wrote (emphasis added) to humanities.philosophy.objectivism on 1998-02-22:

https://groups.google.com/forum/#!searchin/humanities.philosophy.objectivism/%22eskimos$20and$20prudent$20$20predators%22%7Csort:date/humanities.philosophy.objectivism/tDVhLu5szYQ/Tj7gFsjuoDgJ

> [...] the *Objectivist belief that the moral is always the practical*. But I think it has been demonstrated repeatedly here--although not to the satisfaction of many of the Objectivists--that that belief can only be logically maintained if you are willing to stretch "moral" to cover lots of things, such as *murdering innocent people*, that most of us (with the possible exception of Chris Wolf) don't believe are moral. The attempt to evade that conclusion has occupied lots of bandwidth, on topics such as eskimos and prudent predators, but seems to me, at least, a total failure.

In other words: Friedman claims that because “murdering innocent people” is “practical” (his view), Objectivism is incorrect to claim that "the moral is always the practical". He thinks murdering innocent people is practical but not moral, so morality and practicality differ.

David Friedman is a monster.

> Economist David Friedman writes:

> http://www.daviddfriedman.com/Academic/Becker_Chapter/Becker_Chapter.html

>> It is useful to begin our analysis of optimal law enforcement with a simple, although entirely unrealistic, case. Suppose we can catch all criminals and collect fines from them, and that it costs nothing to do so. In this fortunate world, how should we set the fines?

Why is DF focused on fines?

The primary purpose of criminal law should be protecting innocent people from criminals. Murderers, rapists, muggers and the like. Typically this requires incarceration, not just fines. Lots of criminals don't have the resources to pay a fine anyways, so a fine will have no effect.

Details about fines are a minor issue but DF is giving them central importance.

>> Our first guess might be that the fine should be high enough to deter all crimes.

Not even the *death penalty* can do that.

>>But there may be some crimes we do not want to deter. Consider a hunter, lost and starving in the woods, who comes across a locked cabin containing food and a telephone. The benefit to him of breaking in and calling for rescue is much larger than the cost to the cabin's owner; we will, on net, be better off if that particular offense is not deterred.

One way to handle this case is: for the various criminal offenses where this issue might come up, there is an affirmative defense of preserving your life. If you successfully raise this defense, you suffer no *criminal penalty* but the property owner could still recover damages from you at his discretion

>For a less exotic example, consider the driver who occasionally exceeds the speed limit when he is in a hurry. We could deter all or almost all speeding if we routinely confiscated the cars of convicted speeders-but many of us would regard that as more deterrence than we want.

The issue there is the speed limit is set in the wrong place. The law is wrong, objectively. People would abide by a reasonably set and strongly enforced limit.

>> If a crime produces a net benefit, if the gain to the speeder or the lost hunter is more than the loss to the rest of us, we are better off not deterring it.

Similar arguments have been made for letting government violate people's property rights to benefit private developers, since the benefit to be gained is supposedly greater than the value of respecting property owner's' rights.

>>In many cases our legal system permits such "efficient crimes" by not classifying them as crimes. Every time I breath out I exhale carbon dioxide-regarded, in some contexts, as a pollutant.

I don't think DF is contributing meaningful to pollution. His exhaling of of bad ideas is way more harmful in any case

>>Most of us are confident that this particular offense is an efficient one-we are better off if we put up with a certain amount of extra carbon dioxide than if we all stop breathing. So exhaling, unlike some other forms of pollution, is not illegal. Similarly, the lost hunter of my example would probably be excused from criminal liability under the doctrine of necessity.

> Anyone want to analyze or criticize this?

Some quotes from the preface of "Time Will Run Back", a novel by economist Henry Hazlitt. BTW he dedicated the novel to Mises :)

> If capitalism did not exist, it would be necessary to invent it—and its discovery would be rightly regarded as one of the great triumphs of the human mind. This is the theme of Time Will Run Back. But as “capitalism” is merely a name for freedom in the economic sphere, the theme of my novel might be stated more broadly: The will to freedom can never be permanently stamped out.

...

> The idea of writing a novel on this theme came to me many years ago. It was touched off, as I recall, by several paragraphs in Ludwig von Mises’ Socialism, which I reviewed for the New York Times (January 9, 1938). But more than a decade passed before I felt sufficient sense of urgency to put the idea into effect.

…

> Many readers will see, in Part One of my book, striking coincidences with George Orwell’s Nineteen Eighty-Four. These are, however, in fact coincidences. Orwell’s book was published in 1949, The Great Idea not until 1951.1 did not read Orwell’s book until after I had finished the first draft of my own. I was at first disturbed by the number of coincidences, but it then occurred to me that at least the broad outlines if not all the details of the imagined future life were the common property of more than one of the recent writers who have tried to imagine that life (Zamiatin in We and Aldous Huxley in Brave New World, for example).

> These writers had not been plagiarizing from each other; but all of them had, so to speak, been plagiarizing from the actual nightmare created by Lenin, Hitler and Stalin (and now prolonged by Communist regimes wherever they get into power). All that the writer had done was to add a few logical extensions not yet generally foreseen.

> While Orwell, moreover, portrayed with unsurpassable power the intellectual paralysis and spiritual depravity that a totalitarian regime imposed, he left the determining economic aspect virtually blank (except for the dreadful end-results for consumers). And his book closed on a note of utter despair. Time Will Run Back, with its promise of material progress and spiritual rebirth, is in a sense an answer to the black pessimism of Nineteen Eighty-Four. Though my book begins at practically the same point as Orwell’s, it ends at a diametrically opposite one. My book is also, in a sense, an answer to Bellamy’s Looking Backward of 1888, because it turns the Bellamy situation upside down.

…

> Thus my book points out that a centrally directed economy cannot solve the problem of economic calculation, and that without private property, free markets, and freedom of consumer choice, no organizational solution of this problem is possible. If all economic life is directed from a single center, solution of the problem of the exact amounts that should be produced of thousands of different commodities, and of the exact amount of capital goods, raw materials, transport, etc. needed to produce the optimum volume of goods in the proper proportion, and the solution of the problem of the coordination and synchronization of all this diverse production, becomes impossible. No single person or board can possibly know what is going on everywhere at the same time. It cannot know what real costs are. It has no way of measuring the extent of waste. It has no real way of knowing how inefficient any particular plant is, or how inefficient the whole system is. It has no way of knowing just what goods consumers would want if they were produced and made available at their real costs.

> So the system leads to wastes, stoppages, and breakdowns at innumerable points. And some of these become obvious even to the most casual observer. In the summer of 1961, for example, a party of American newspapermen made an 8,000-mile conducted tour of the Soviet Union. They told of visiting collective farms where seventeen men did the work of two; of seeing scores of buildings unfinished “for want of the proverbial nail”; of traveling in a land virtually without roads.

> In the same year even Premier Khrushchev complained that as of January 1 there were many millions of square feet of completed factory space that could not be used because the machinery required for them just wasn’t available, while at the same time in other parts of the country there were the equivalent of hundreds of millions of dollars worth of machinery of various kinds standing idle because the factories and mines for which this machine was designed were not yet ready.

> At about the same time G. I. Voronov, a Communist party Presidium member, said: “Who does not know that the national economy suffers great difficulties with the supply of metals, that the supply of pipes is inadequate, that insufficient supplies of new machinery and mineral fertilizers for the countryside are produced, that hundreds of thousands of motor vehicles stand idle without tires, and that the production of paper lags?”1

> In 1964 Izvestia itself was complaining that the small town of Lide, close to the Polish border, had first been inundated with boots, and then with caramels—both products of state factories. Complaints by local shopkeepers that they were unable to sell all these goods were brushed aside on the ground that the factories’ production schedules had to be kept.

> Such examples could be cited endlessly, year by year, down to the month that I write this. They are all the result of centralized planning.

> The most tragic results have been in agriculture. The outstanding example is the famine of 1921-22 when, directly as a result of collectivization, controls, and the ruthless requisitioning of grain and cattle, millions of peasants and city inhabitants died of disease and starvation. Revolts forced Lenin to adopt the “New Economic Policy”. But once more in 1928 more “planning” and enforced collections of all the peasants’ “surpluses” led to the famine of 1932-33, when more millions died from hunger and related diseases. These conditions, in varying degree, come down to the present moment. In 1963 Russia again suffered a disastrous crop failure. And in 1965, this agrarian nation, one of whose chief economic problems in Tzarist days was how to dispose of its grain surplus, was once more forced to buy millions of tons of grains from the Western capitalist world.

> The industrial disorganization has been less spectacular, or better concealed—at least if we pass over that in the initial phase between 1918 and 1921. But in spite of extravagant claims of unparalleled “economic growth,” Russia’s problems of industrial production have been chronic. Since factory output goals are either laid down in weight or quota by the planners, a knitwear plant recently ordered to produce 80,000 caps and sweaters produced only caps, because they were smaller and cheaper to make. A factory commanded to make lampshades made them all orange, because sticking to one color was quicker and less trouble. Because of the use of tonnage norms, machine builders used eight-inch plates when four-inch plates would easily have done the job. In a chandelier factory, in which the workers were paid bonuses based on the tonnage of chandeliers produced, the chandeliers grew heavier and heavier until they started pulling ceilings down.

> The system is marked by conflicting orders and mountains of paperwork. In 1964 a Supreme Soviet Deputy cited the example of the Izhora factory, which received no fewer than 70 different official instructions from nine state committees, four economic councils and two state planning committees—all of them authorized to issue production orders to that plant. The plans for the Novo-Lipetsk steel mill took up 91 volumes comprising 70,000 pages, specifying precisely the location of each nail, lamp and washstand.

> Yet in 1964, in Russia’s largest republic alone, deliveries of 257 factories had to be suspended because their goods were not bought. As a result of the consumer’s stiffening standards and an increased inclination to complain, $3 billion worth of unsellable junk accumulated in Soviet inventories.2

from "Time Will Run Back", a high-ranking official (Bolshekov) recounts some of the communist world's official history to the protagonist (Peter):

> “Yet I must impress upon you,” he continued, “the one central reason for communism’s success. We began with apparently every possible disadvantage. The enemy started with better arms, more technical advancement, more production, more resources. And yet we beat them in the end because we had the one tremendous weapon that they lacked. We had Faith! Faith in our own Cause! Faith that never for a moment wavered or faltered! We knew that we were right! Right in everything! We knew that they were wrong! Wrong in everything!”

> Bolshekov was shouting. He stopped for a moment as if to let this sink in.

> “The enemy never had any real faith in capitalism,” he went on. “They started out with little, and began rapidly to lose what they had. Those who had once embraced the gospel of communism were willing to die for it; but nobody was willing to die for capitalism. That would have been considered a sort of joke. Finally, the best thing our enemies could think of saying for capitalism was that it wasn’t communism! Even they didn’t seem to think that capitalism had any positive virtues of its own. And so they simply denounced communism. But their idea of meeting the challenge of communism was to imitate it. They gave lip service to capitalism and to something that they called private enterprise or free enterprise—nobody any longer knows what these old phrases meant—but every ‘reform’ they put into effect as an ‘answer’ to communism was another step in the direction of adopting communism. For every reform they adopted left the individual with less power and the State with more. Step by step the control of individuals over resources and goods was taken away; step by step that control was taken over by the State. It was at first not ‘ownership’ but merely the power of decision that was turned over to the State. But the fools who were trying to ‘reform’ capitalism did not see that the power of decision, the power of disposal, was the essence of ‘ownership.’ So they took away from private individuals, step by step, the power to set their own prices, or to decide what to produce or how much of it, or to hire or discharge labor at will, or to set the terms of employment. Gradually their governments themselves fixed all these things, but piecemeal, instead of in one grand logical swoop. It was amusing to see them slavishly imitate the Communist Five-Year Plans by their own ‘Four-Year Plans. These were, of course, like ours, all State plans. Incredible as it now seems, these people actually seemed to believe that calling them Four-Year Plans instead of Five-Year Plans would prevent everybody from recognizing the imitation. In fact, some of them were too stupid even to know at first that they were imitating.”

> He stopped to pour himself a glass of water.

> “In brief, step by step the capitalistic world accepted the basic premise of communism—that the individual, left to himself, is greedy, callous, stupid and irresponsible; that ‘individualism’ and ‘liberty’ are simply euphemisms for dog-eat-dog, the law-of-the-jungle, the-devil-take-the-hindmost—in short, euphemisms for anarchy—and that only the State has responsibility, only the State has wisdom, only the State can be just, only the State can be trusted with power. They accepted this premise, but they lacked the courage or the clarity to follow it to its logical end. They lacked the courage to see that the individual, because he is responsible to nobody, must be deprived of all power, and that the State, the State representing all the people, must be the sole depositor of all the power, the sole maker of decisions, the sole judge of its own—”

> He pulled himself up. “I hadn’t meant to get into all of this just now. But is it any surprise that the capitalist world was defeated? Is it any surprise that it kept losing supporters both from the outside and from the inside? Do you know what the American political leaders did at one time? They threw huge sums of money around the world to try to bribe the rest of the world not to go communist! They thought they could buy off faith by dollars!”

> “And what happened?”

> “What would you expect to happen? The other bourgeois countries found that the easiest way to get money out of the Disunited States was to hint that they might go communist if they didn’t get it. Soon they began to believe themselves that their chief reason for not going communist was as a favor to the Disunited States, and that their chief reason for arming against us was not for their own preservation but again as a favor to the Disunited States! If bourgeois America wanted them to arm, they felt, it could jolly well pay for it! And they used most of the other American funds, anyway, to finance socialist programs—in other words, to move in the direction of communism!”

> He grinned, then turned suddenly serious again. “Should there be any surprise that while they could bribe only a few spies among us, we had swarms of voluntary spies among them—people who gave us information gladly, of their own will; people whom we did not have to pay; people who ‘betrayed their countries,’ to use the phrase of condemnation that the capitalist nations tried to adopt—people who betrayed their countries exultantly, from a sense of duty, because their countries were wrong, and because they were serving a higher cause, the cause of humanity!” Peter was deeply impressed by the passion and conviction of this man. “Well, I hope you’ll forgive me,” said Bolshekov, “if I keep getting carried away from my point.”

> “No, no,” said Peter; “all this is precisely what I need to learn. But may I ask one question? Why did the bourgeois countries fight against communism at all?”

> “They fought against communism because they were ‘against’ communism. That was the only point on which they could agree. But they didn’t know what they were for. Everybody was for something different. Nobody had the courage to defend a capitalism that was true to the basic premises of capitalism. Each had his own little plan for a ‘reformed’ capitalism. They could stave off communism, they thought, only by ‘correcting abuses’; but all their plans for correcting abuses were steps toward socialism and communism. They quarreled among themselves as to how far they wanted to go toward communism in order to ‘defeat’ communism, as to how far they should embrace communist ideas in order to destroy communist ideas. I know all this sounds incredible, but I assure you it is true.”

> “But didn’t anybody have faith in capitalism?”

> “Not in the sense in which everybody on our side had faith and has faith in communism. The strongest among our enemies were halfhearted. They merely apologized for capitalism. They would say that capitalism, with all its faults—and then they would compete against each other in seeing who could admit the most faults—that capitalism with all its faults was probably as good as reasonable men could expect—and so forth and so on. And so we wiped them out.”

from "Time Will Run Back." Peter argues economics + incentives with Bolshekov, a high-ranking member of the Politburo

> “And yet I can’t understand it,” Bolshekov went on. “I don’t know which baffles me most—the masses’ lack of mass consciousness or their lack of intelligence. With all the conditioning our people get from their earliest years, with all the exhortation, all the propaganda, you would think everybody without exception would want to produce to the peak of his ability. They no longer have any capitalist masters! The fruits of their labor are no longer expropriated by somebody else! They now collectively own everything! Won world and everything in it is their collective property! You would think they would want to increase this property. Everybody is now working for everybody else! And yet everybody complains about the bad quality of goods and about how little he gets! Why can’t he understand that it’s his shoddy work that makes goods bad, that it’s his lack of production that leaves so few goods to go around? Why can’t everybody understand that whether or not there is a great aggregate production to be distributed depends upon his contribution to that aggregate?”

> “Maybe because it isn’t so,” Peter suggested.

> “What!”

> Bolshekov’s eyes seemed to flash green fire.

> “Well, of course,” Peter continued, “everything you say is perfectly true when you look at the problem collectively, as you do. But it isn’t true for the individual (if I may coin a word), when he looks at it from his point of view. You say that everybody is now working for everybody else. Isn’t that just the trouble—that nobody is now working for himself?’’

> “For daring to express one tenth of such heresy, any other man would be sent to a concentration camp,” warned Bolshekov. “Does No. 1 know that you hold such views?”

> “Just bear with me a moment. I am trying to help you solve a problem that you admit baffles you,” said Peter with conscious courage. “The individual is told that if he increases his output he will, other things being equal, increase total output. Mathematically, of course, he must recognize that this is so. But mathematically he senses, also, that his own contribution can have only an infinitesimal relationship to his own welfare. He knows that even if he personally worked like a galley slave, and nobody else worked, he would still starve. And he knows also, on the other hand, that if everybody else worked like a galley slave, and he did nothing, or only made the motions of working when somebody was watching him, he would live like a commissar—I mean, like a king.... I have been reading about kings in the histories you recommended.”

> “But he knows, No. 13, that if everybody stopped working he would starve. He knows that if everybody only made the motions of working, and then only when being watched, there would be universal starvation, while if everybody worked, even when no one was egging him on, there would be plenty to be shared among all.”

> “I know all that, No. 2,” persisted Peter. “And he knows all that—as an abstract proposition, or when he looks at it from your standpoint as Commissar of Production—or when he looks at it collectively. And apparently some people do. But not, I fear—from what I have observed—the majority. When we consider the majority, I’m afraid, each person tends to look at the matter most of the time from his own standpoint. Maybe he can make occasional sacrifices for the good of the whole for brief intervals. But year in and year out? Well, let’s figure it.

> What is the population of Wonworld?”

> “About a billion.”

> “A billion. Then say I am a worker and by back-breaking work I double my production. If my previous production was average, I have increased Won-world’s total production by only one billionth. This means that I personally, assuming equal distribution, get only one billionth more to eat, in spite of my terrific effort. I could never even notice such an increase. On the other hand, suppose, without getting caught, I don’t work at all. Then I get only one billionth less to eat. The deprivation is so infinitesimal that again I would be unable to notice it. But think of all the work I would save!”

> A tiny cloud of doubt seemed to drift across Bolshekov’s brow.

David Friedman (son of Milton) wrote:

https://groups.google.com/forum/#!searchin/humanities.philosophy.objectivism/%22eskimos$20and$20prudent$20$20predators%22%7Csort:date/humanities.philosophy.objectivism/tDVhLu5szYQ/Tj7gFsjuoDgJ

> [...] the Objectivist belief that the moral is always the practical. But I think it has been demonstrated repeatedly here--although not to the satisfaction of many of the Objectivists--that that belief can only be logically maintained if you are willing to stretch "moral" to cover lots of things, such as murdering innocent people, that most of us [...] don't believe are moral. [...]

Summary: Friedman claims that because “murdering innocent people” is (sometimes) “practical” (his view), Objectivism is incorrect to claim that "the moral is always the practical".

Friedman ought to know that that “Objectivist” belief comes from the liberal doctrine of the harmony of men’s interests. I’ll let Mises answer Friedman (written before Rand's first book):

http://oll.libertyfund.org/titles/mises-liberalism-the-classical-tradition-1927-lf-ed

> If one rejects this doctrine of liberalism, if one heaps ridicule on the controversial theory of the "harmony of interests of all men," then it is not true, either, as is wrongly assumed by all schools of antiliberal thought, that there could still be a solidarity of interests within narrower circles, as, for instance, among members of the same nation (as against other nations) or among members of the same "class" (as against other classes). In order to demonstrate the existence of such an alleged solidarity, a special line of reasoning would be necessary that no one has followed or has even attempted to follow. For all the arguments that could be employed to prove the existence of a solidarity of interests among the members of any of these groups prove much more besides, viz., the universal solidarity of interests within ecumenical society. How those apparent conflicts of interest that seem at first sight to be irreconcilable are in fact resolved can be shown only by means of a line of reasoning that treats all mankind as an essentially harmonious community and allows no room for the demonstration of any irreconcilable antagonisms among nations, classes, races, and the like.

Should fathers sometimes murder innocent sons, and vice versa, in order to be practical? Or is there a special line of reasoning which applies to families but not to other innocents?

Why do economists prefer to preach the benefits of murder over studying Mises and learning that peaceful cooperation is more practical? Mises offers a utopia, backed by economic logic, and hardly anyone will even consider it. Friedman also ignores Mises in academic writing, e.g.:

http://www.daviddfriedman.com/Academic/Becker_Chapter/Becker_Chapter.html

> The economic analysis of crime starts with one simple assumption: Criminals are rational. A mugger is a mugger for the same reason I am a professor-because that profession makes him better off, by his own standards, than any other alternative available to him. Here, as elsewhere in economics, the assumption of rationality does not imply that muggers (or economics professors) calculate the costs and benefits of available alternatives to seventeen decimal places-merely that they tend to choose the one that best achieves their objectives.

Friedman believes economic analysis of crime *starts by assuming* that crime pays (or else criminals wouldn’t do it). He rejects Mises, by assumption not argument, at the start. He seems unaware of anything Mises wrote about people using means which are inappropriate for attaining the ends sought. Due to their ignorance of economics, people from muggers to famous economists often choose alternatives that do *not* best achieve their objectives.

*Time Will Run Back* by Hazlitt:

> “It is precisely enough knowledge for making practical decisions that I’m trying to get,” said Peter. “Suppose somebody in the Central Planning Board thought that we needed more shoes. And suppose we could make them only by taking more labor away from the production of leather belts, or even away from the production of wheat. Suppose we increased the production of shoes from 200,000,000 to 250,000,000 pairs a year, but only at the cost of reducing the production of wheat from 1,000,000,000 to 800,000,000 bushels a year. Would we be better off or worse off?”

> “That’s hard to say. We could only judge from the volume of complaints.”

> “The complaints of the people who would be shot for complaining?”

> “It is on the basis of their mentality of collectivism and statism that the authors of the Clinton plan seek to impose a system of medical care on the American people that will be determined not by individuals acting for their own self-interest with the help of the best their money can buy, but from on high, by considerations of the nation’s medical spending in relation to its gross national product. These considerations, as interpreted and applied by the proposed National Health Board, will extend their tentacles from the nation’s capital out into the examining office of every doctor and into every hospital and operating room by means of governmentally imposed fixed budgets and “Practice Guidelines.” They will determine the course of treatment that is deemed appropriate in the individual case that stands before the physician or that is to lie before him on the operating table. Thus, the life of the individual patient and the thinking and planning of the physician in the service of the individual patient’s life are no longer to be what medicine is about. Instead, it is to be about “national priorities” and considerations of nationwide medical spending in relation to the gross national product. This is an utter perversion of the art of medicine. It is an utter perversion of what the United States of America and its Constitution and Bill of Rights are about. The Founding Fathers of the United States did not create this country so that someday a generation of descendants would so debase themselves as to welcome the prospect of living as serfs on a vast, transcontinental feudal estate presided over by President and Mrs. Clinton.”

The Real Right to Medical Care versus Socialized Medicine | Mises Institute

https://mises.org/library/real-right-medical-care-versus-socialized-medicine

via Instapaper

#12814 I have not read the article, and I don't know details of the Amazon HQ case. But I have thought about this kind of case before.

I think both of the issues you mentioned are important and relevant. I think you have to look at how the specifics of the proposed tax rule change and how they affect each one. I state the issues as:

(1) Lower taxes are better than higher taxes.

(2) Such taxes as there are should be equally applied.

Deals that are mostly about lowering the overall tax burden in a given location are fine, even if the lowering is not perfectly equal because people do different things, want different things, etc.

Deals that are mostly about carving out a special exemption for one company or one industry while keeping the overall tax burden unchanged are bad. Unfortunately, I think most of the deals that attract big companies fall in this second category.

The appearance of tax equality is important enough that the localities write rules so as to at least superficially appear equal. Figuring out how much they're about tax reduction vs. how much they're about handing out special favors requires reading and analyzing the deal.

I'm speculating, but my guess is that they didn't write something like:

If Amazon, Inc. places its headquarters in this county next year they will get a special offset against property taxes of $25 million a year for 10 years.

Instead, I guess that they wrote something like A or B:

A: Any company with over $200 billion in annual revenue which builds a new headquarters in this county between 2019 and 2020, and employs at least 5000 more people in this county in 2021 as compared to 2019, at an average salary of greater than $50,000 per new employee, shall be entitled to an offset against property taxes levied by this county of $25 million a year for 10 years.

B: Any company which employs people in this county at an average salary greater than $50,000 shall be entitled to an offset against property taxes levied by this county equal to $5000 per employee for a period of 10 years.

Both A and B are written so as to appear to be generally applicable - neither mentions Amazon. Assuming Amazon was planning to bring 5000 people in at average 50k salary, the net result to them of A and B are the same ($25m/year for 10 years).

But A is likely to *only* benefit Amazon, whereas B is likely to benefit lots of current and potential businesses in a way that's proportional to their size.

If my county was proposing something like A I would oppose it cuz it's basically just a special favor to a big powerful company.

If they were proposing something like B I would support it. Not cuz B is perfectly equal either: non-business owners and business owners in low wage industries wouldn't have their taxes lowered by B. But B does have a significant component of general tax reduction, not just a handout to one favored company.

I may have more comments after I read the article.

I think I get Salerno's point about subsidy vs tax cut and that seems fair. But OTOH if (taking intentionally extreme hypothetical) all businesses get taxed at 95% and some business gets 0 percent tax cuz it's eg run by a Senator's daughter, that still seems bad even if it's not technically a subsidy.

Tangential point. Salerno says

>“The economist, however, can also assert that, irrespective of the details of its kind and scope, a larger tax cut is always more efficient than a smaller one because it moves the economy farther in the direction of the optimal allocation of resources”

I don't think that's true if eg a larger tax cut prevented a govt from buying sufficient weapons to defend itself from communist invaders, since in full context the tax cut would lead to way worse efficiency later on due to communist central planning

I think Salerno has some good points but we can have ideas about taxation fairness that matter similar to ideas about equality before the law. We aren't limited to making *economic* arguments which *prove* which tax systems are fairer, we can use other modes of argument.

To some extent I think he wants the system to be unfair so that people hate it and try to repeal lots of laws. I think that's bad.

But I also think it's bad how comfortable most people are with taxes, and how some free market economists were calling Amazon's *fairly small* tax breaks a "subsidy". I think in the Amazon case there is nothing to complain about. It's sorta like a store offering a volume discount. It's nothing like getting a 100% discount because your brother is friends with the store manager.

I really enjoyed this criticism of Negative Income Tax in Hazlitt's "Man vs. The Welfare State"

>Some readers may think that the dilemma of the NIT scheme can somehow be escaped by changing the percentage by which the relief payment or income supplement is reduced as self-earnings increase. But any change from 50 per cent one way or the other merely reduces one horn of the dilemma by making the other more formidable. If we reduce the government supplement by 75 cents for every dollar of self-earnings, we correspondingly reduce or destroy the incentive for such self-earnings. If we reduce the government supplement by only 25 cents for every dollar of self-earnings, we increase the recipient’s incentive to work and earn, but at the cost of a still more expensive program for the government, and we increase the recipient’s positive incentive to stay on relief because of the violent drop in his income if he ever got off. If we make the scheme more complicated by, say, reducing the relief payment or supplementary income by only 25 cents for every dollar of the recipient’s first $10 of weekly self-earnings, 50 cents for every dollar of his second $10 of self-earnings, and 75 cents for every dollar of his third $10 of self-earnings, or some similar scheme, we merely pile up an administrative nightmare without solving the basic dilemma. The unpalatable truth seems to be that whenever we try to “increase incentives” by reducing a relief payment by less than a dollar for every additional dollar of self-earnings, we solve an immediate problem at the cost of building up a bigger problem for the future.

Per Bylund, an Austrian economist with social status at the Mises Institute, who has written academically about Popper, and posts tweetstorms using pieces of Popper without direct attribution/credit. Those are hard to search for because they don't have the word "Popper". Here's a tweet where he advocates radicalism in the name of Popper.

In the link below, Bylund makes a fool of himself, doesn't understand Popper basics (he advocates induction as partially working and advocates probabilistic conclusions as a solution to fallibility and Dunhem-Quine), and doesn't understand comments on what he said and isn't interested in discussion or criticism. He actually denies having said what he just said. He claims the context is a negative thread, but within it he made positive claims which he won't take responsibility for:

https://twitter.com/PerBylund/status/1111585961157292032

#13871 Before curi's criticism, Bylund had already posted a separate tweet making clear he did hold the position curi criticized (which he tried to ambiguously disown in response to curi):

https://twitter.com/PerBylund/status/1111613738921218048

> Indeed, that's the point I'm making: inductive science cannot provide a True answer, only a probabilistic one.

That's refuted by Popper. Alan tried telling him that:

https://twitter.com/alan_forrester/status/1112089507019608072

But Bylund ignored Alan.

From The Failure of the 'New Economics':

> In the starry eyes of some admirers, even the book's faults seem somehow to add to its greatness. Professor Paul A. Samuelson, of the Massachusetts Institute of Technology, author of the most widely used college textbook in economics at the present time, writes of the General Theory:

>> It is a badly written book, poorly organized; any layman who, beguiled by the author’s previous reputation, bought the book was cheated of his 5 shillings. It is not well suited for classroom use. It is arrogant, bad-tempered, polemical, and not overly generous in its acknowledgments. It abounds in mares’ nests and confusions. ... In short, it is a work of genius.3

> Even stranger is Samuelson's implication that the very obscurity of the book is an embarrassment, not to the disciples of Keynes, but chiefly to his critics: “It bears repeating that the General Theory is an obscure book so that would-be anti-Keynesians must assume their position largely on credit."

I didn't really understand the last Samuelson quote upon first reading so I tried to do some careful analysis (I used Webster's 3rd dictionary). I think the meaning of "obscure" in that last Samuelson quote is "b.: not readily understood : lacking clarity or legibility : not clearly expressed :abstruse." I think the meaning of "credit" in the last Samuelson quote is "a.: reliance on the truth or reality of something :belief, faith, trust." Also, to be an anti-Keynesian, one must have some view of what Keynes said. So I take the Samuelson quote as saying that the General Theory is so unclear that would-be anti-Keynesians must take their anti-Keynesian position largely on a faith or belief about what Keynes said. And Hazlitt is saying that Samuelson is implying that this obscurity of the book is embarrassing to the critics of Keynes and not Keynes' disciples.

Anyways reading this I was reminded of this part in *Philosophy: Who Needs it* by Ayn Rand:

https://courses.aynrand.org/works/an-untitled-letter/

> Like any overt school of mysticism, a movement seeking to achieve a vicious goal has to invoke the higher mysteries of an incomprehensible authority. An unread and unreadable book serves this purpose. It does not count on men’s intelligence, but on their weaknesses, pretensions and fears. It is not a tool of enlightenment, but of intellectual intimidation. It is not aimed at the reader’s understanding, but at his inferiority complex.

> An intelligent man will reject such a book with contemptuous indignation, refusing to waste his time on untangling what he perceives to be gibberish—which is part of the book’s technique: the man able to refute its arguments will not (unless he has the endurance of an elephant and the patience of a martyr). A young man of average intelligence—particularly a student of philosophy or of political science—under a barrage of authoritative pronouncements acclaiming the book as “scholarly,” “significant,” “profound,” will take the blame for his failure to understand. More often than not, he will assume that the book’s theory has been scientifically proved and that he alone is unable to grasp it; anxious, above all, to hide his inability, he will profess agreement, and the less his understanding, the louder his agreement—while the rest of the class are going through the same mental process. Most of them will accept the book’s doctrine, reluctantly and uneasily, and lose their intellectual integrity, condemning themselves to a chronic fog of approximation, uncertainty, self doubt. Some will give up the intellect (particularly philosophy) and turn belligerently into “pragmatic,” anti-intellectual Babbitts. A few will see through the game and scramble eagerly for the driver’s seat on the bandwagon, grasping the possibilities of a road to the mentally unearned.

> Within a few years of the book’s publication, commentators will begin to fill libraries with works analyzing, “clarifying” and interpreting its mysteries. Their notions will spread all over the academic map, ranging from the appeasers, who will try to soften the book’s meaning—to the glamorizers, who will ascribe to it nothing worse than their own pet inanities—to the compromisers, who will try to reconcile its theory with its exact opposite—to the avant-garde, who will spell out and demand the acceptance of its logical consequences. The contradictory, antithetical nature of such interpretations will be ascribed to the book’s profundity—particularly by those who function on the motto: “If I don’t understand it, it’s deep.” The students will believe that the professors know the proof of the book’s theory, the professors will believe that the commentators know it, the commentators will believe that the author knows it—and the author will be alone to know that no proof exists and that none was offered.

> Within a generation, the number of commentaries will have grown to such proportions that the original book will be accepted as a subject of philosophical specialization, requiring a lifetime of study—and any refutation of the book’s theory will be ignored or rejected, if unaccompanied by a full discussion of the theories of all the commentators, a task which no one will be able to undertake.

> This is the process by which Kant and Hegel acquired their dominance. Many professors of philosophy today have no idea of what Kant actually said. And no one has ever read Hegel (even though many have looked at every word on his every page).

Hazlitt shares an idea related to error correction and intellectual progress, from *The Failure of the New Economics*, Chapter I (all quotes from Chapter I so far):

> [...] though there has been some diminution of Keynes's influence, and though several of his theories have been given a decent burial, his influence both on academic thought and on practical policy is still tremendous. It would in any case be a poor service to clear thinking simply to allow his theories to be forgotten, even if we assume that this is what may occur. “One of the peculiarities of recent speculation, especially in America/' once wrote Santayana, “is that ideas are abandoned in virtue of a mere change of feeling, without any new evidence or new arguments. We do not nowadays refute our predecessors, we pleasantly bid them good-bye." 8

> Simply to bid our predecessors good-bye does not further clarity or progress of thought. Unless we know not only that some past doctrine was wrong, but precisely why it was wrong, we have not learned all the lessons that the error has to teach us, and there is real danger that it may make its appearance in another form.

Hazlitt on his problem-centered approach, from *The Failure of the New Economics*, Chapter I:

> Nor, in examining the views put forward by a single man (or his disciples), do we necessarily confine ourselves to those views. Their analysis becomes a way of gaining a clearer and wider grasp of the problems with which that writer dealt. In the first chapter of his Examination of Sir William Hamilton's Philosophy (1865), Mill wrote: “My subject, therefore, is not Sir W. Hamilton, but the questions

which Sir W. Hamilton discussed. It is, however, impos­sible to write on those questions in our own country and in our own time, without incessant reference, express or tacit, to his treatment of them.”

> The subject of this book, likewise, is not John Maynard Keynes but the problems he discussed. And we cannot dis­ cuss these problems at the present day without discussing his treatment of them.

https://mises.org/library/classical-economics-vs-exploitation-theory

> Classical Economics vs. The Exploitation Theory

> According to this [Exploitation] theory, capitalism is a system of virtual slavery, serving the narrow interests of a comparative handful of businessmen and capitalists, who, driven by insatiable greed and power lust, exist as parasites upon the labor of the masses.

> This view of capitalism has not been the least bit shaken by the steady rise in the average standard of living that has taken place in the capitalist countries since the beginning of the Industrial Revolution. The rise in the standard of living is not attributed to capitalism, but precisely to the *infringements* which have been made upon capitalism.

https://mises.org/library/anti-obamanomics-why-everyone-should-be-favor-reducing-taxes-rich

> Anti-Obamanomics: Why Everyone Should Be in Favor of Reducing Taxes on the "Rich"

by Reisman

https://oll.libertyfund.org/titles/mises-planning-for-freedom-let-the-market-system-work-a-collection-of-essays-and-addresses

(Formatting omitted, emphasis is mine.)

12: Liberty and Its Antithesis

As the harbingers of socialism tell us again and again, socialism will not only make all people rich, but will also bring perfect freedom to everybody. The transition to socialism, declares Frederick Engels, the friend and collaborator of Marx, is the leap of mankind from the realm of necessity into the realm of freedom. Under capitalism, say the Communists, there is bondage for the immense majority; in the Soviet Union alone there is genuine liberty for all.

The treatment of this problem of freedom and bondage has been muddled by confounding it with the issues of the nature-given conditions of man’s existence. In nature there is nothing that could be called freedom. Nature is inexorable necessity. It is the state of affairs into which all created beings are placed and with which they have to cope. Man has to adjust his conduct to the world as it is. He lacks the power to rise in rebellion against the “laws of nature.” If he wants to substitute more satisfactory conditions for less satisfactory, he has to comply with them.

Freedom in Society Means Freedom for Individuals to Choose

The concept of freedom and its antithesis make sense only in referring to the conditions of social cooperation among men. Social cooperation, the basis of any really human and civilized existence, can be achieved by two different methods. It can be cooperation by virtue of contract and voluntary coordination on the part of all individuals, or it can be cooperation by virtue of command on the part of a Führer and compulsory subordination of the many. The latter system is authoritarian.

In the libertarian system every individual is a moral person, that is, he is free to choose and to act and is responsible for his conduct. In the authoritarian system the supreme chief alone is a free agent while all the others are bondsmen subject to his discretion. Where the authoritarian system is fully established, as was for instance the case in the empire of the Inca in pre-Columbian America, the subjects are merely in a zoological sense human; virtually they are deprived of their specifically human faculty of choosing and acting and are not accountable for their conduct. It was in accordance with this degradation of man’s moral dignity that the Nazi criminals declined any responsibility for their deeds by pointing out that all they did was to obey the orders of their superiors.

Western civilization is based upon the libertarian principle, and all its achievements are the result of the actions of free men. Only in the frame of a free society is it meaningful to distinguish between what is good and ought to be done and what is bad and ought to be avoided. Only in such a free society has the individual the power to choose between morally commendable and morally reprehensible conduct.

Man is not a perfect being and there is no perfection in human affairs. Conditions in the free society are certainly in many regards unsatisfactory. There is still ample room for the endeavors of those who are intent upon fighting evil and raising the moral, intellectual and material level of mankind.

Socialism Leads to Total Control

But the designs of the Communists, Socialists, and all their allies aim at something else. They want to establish the authoritarian system. What they mean in extolling the benefits to be derived from what they call “planning” is a society in which all of the people should be prevented from planning their own conduct and from arranging their lives according to their own moral convictions. One plan alone should prevail, the plan of the great idol State (with a capital S), the plan of the supreme chief of the government, enforced by the police. Every individual should be forced to renounce his autonomy and to obey, without asking questions, the orders issued from the Politburo, the Führer’s secretariat. This is the kind of freedom that Engels had in mind. It is precisely the opposite of what the term freedom used to signify up to our age.

It was the great merit of Professor Friedrich von Hayek to have directed attention to the authoritarian character of the socialist schemes, whether they are advocated by international or by nationalist socialists, by atheists or by misguided believers, by white-skinned or by dark-skinned fanatics. Although there have always been authors who exposed the authoritarianism of the socialist designs, the main criticism of socialism centered around its economic inadequacy, and did not sufficiently deal with its effects upon the lives of the citizens. Because of this neglect of the human angle of the issue, the great majority of those supporting socialist policies vaguely assumed that the restriction of the individuals’ freedom by a socialist regime will apply “only” to economic matters and will not affect freedom in non-economic affairs.

But as Hayek in 1944 clearly pointed out in his book The Road To Serfdom, economic control is not merely control of a sector of human life that can be separated from the rest; it is the control of the means for all our ends. As the socialist state has sole control of the means, it has the power to determine which ends are to be served and what men are to strive for. It is not an accident that Marxian socialism in Russia and nationalist socialism in Germany resulted in the complete abolition of all civil liberties and the establishment of the most rigid despotism. Tyranny is the political corollary of socialism, as representative government is the political corollary of the market economy.

Now Professor Hayek has enlarged and substantiated his ideas in a comprehensive treatise, The Constitution of Liberty.* In the first two parts of this book the author provides a brilliant exposition of the meaning of liberty and the creative powers of a free civilization. Endorsing the famous definition that describes liberty as the rule of laws and not of men, he analyzes the constitutional and legal foundations of a commonwealth of free citizens. He contrasts the two schemes of society’s social and political organization, government by the people (representative government) based upon legality, and government by the discretionary power of an authoritarian ruler or a ruling clique, an Obrigkeit as the Germans used to call it. Fully appreciating the moral, practical and material superiority of the former, he shows in detail what the legal requirements of such a state of affairs are and what has to be done in order to make it work and to defend it against the machinations of its foes.

The Welfare State Leads to Socialism

*Unfortunately, the third part of Professor Hayek’s book is rather disappointing. Here the author tries to distinguish between socialism and the Welfare State. Socialism, he alleges, is on the decline; the Welfare State is supplanting it. And he thinks that the Welfare State is, under certain conditions, compatible with liberty.*

In fact, the Welfare State is merely a method for transforming the market economy step by step into socialism. The original plan of socialist action as developed by Karl Marx in 1848 in the Communist Manifesto aimed at a gradual realization of socialism by a series of governmental measures. The ten most powerful of such measures were enumerated in the Manifesto. They are well known to everybody because they are the very measures that form the essence of the activities of the Welfare State, of Bismarck’s and the kaiser’s German Sozialpolitik as well as of the American New Deal and British Fabian Socialism. The Communist Manifesto calls these measures which it suggests “economically insufficient and untenable,” but it stresses the fact that “in the course of the movement [they] outstrip themselves, necessitate further inroads upon the old social order, and are unavoidable as a means of entirely revolutionizing the mode of production.”

Later, Marx adopted a different method for the policies of his party. He abandoned the tactics of a gradual approach to the total state of socialism and instead advocated a violent revolutionary overthrow of the “bourgeois” system that at one stroke should “liquidate” the “exploiters” and establish “the dictatorship of the proletariat.” It was this that Lenin did in 1917 in Russia and what the Communist International plans to achieve everywhere. What separates the Communists from the advocates of the Welfare State is not the ultimate goal of their endeavors, but the methods by means of which they want to attain a goal that is common to both of them. The difference of opinions that divides them is the same that distinguishes the Marx of 1848 from the Marx of 1867, the year of the first publication of the first volume of Das Kapital.

The Failure of Economic Planning

However, the fact that *Professor Hayek has misjudged the character of the Welfare State* does not seriously detract from the value of his great book. For his searching analysis of the policies and concerns of the Welfare [115] State shows to every thoughtful reader why and how these much-praised welfare policies inevitably always fail. These policies never attain those—allegedly beneficial—ends which the government and the self-styled progressives who advocated them wanted to attain, but—on the contrary—bring about a state of affairs which—from the very point of view of the government and its supporters—is even more unsatisfactory than the previous state of affairs they wanted to “improve.” If the government does not repeal its first intervention, it is induced to supplement it by further acts of intervention. As these fail again, still more meddling with business is resorted to until all economic freedom has been virtually abolished. What emerges is the system of all-round planning, i.e., socialism of the type which the German Hindenburg Plan was aiming at in the First World War and which was later put into effect by Hitler after his seizure of power, and by the British Coalition Cabinet in the Second World War.

The main error that prevents many of our contemporaries from adequately comprehending the significance of various party programs and the trend of the welfare policies is their failure to recognize that there is apart from outright nationalization of all plants and farms (as effected in Russia and China) a second method for the full realization of socialism. Under this system that is commonly called “planning” (or, in war time, war socialism) the various plants and farms remain outwardly and seemingly units, but they become entirely and unconditionally subject to the orders of the supreme planning authority. Every citizen, whatever his nominal position in the economic system may be, is bound to toil in strict compliance with the orders of the planning board, and his income—the amount he is permitted to spend for his consumption—is exclusively determined by these orders. Some labels and terms of the capitalistic system may be preserved, but they signify under the altered conditions something entirely different from what they used to signify in the market economy. Other terms may be changed. Thus in Hitler Germany the head of an outfit who supplanted the entrepreneur or the corporation president of the market economy was styled “shop manager” (Betriebsführer) and the labor force “followers” (Gefolgschaft). As the theoretical pace-makers of this system, e.g., the late Professor Othmar Spann, has pointed out again and again, it retains only the name of private ownership, while in fact there is exclusively public—state—ownership.

Only by paying full attention to these fundamental issues can one [116] form a correct appreciation of the political controversies in the nations of Western civilization. For if socialism and communism should succeed in these countries, it will be the socialism of the planning scheme and not the socialism of the nationalization scheme. The latter is a method applicable to predominantly agricultural countries like those of Eastern Europe and Asia. In the industrial countries of the West the planning scheme is more popular because even the most fanatical statolatrists shrink from directly nationalizing the intricate apparatus of modern manufacturing.

Yet the “planning scheme” is just as destructive of freedom as the “nationalization scheme” and both lead on to the authoritarian state.

in the previous message, the paragraph that starts "Now 'in the long run' this" should have been double-quoted

Do not buy individual stocks. Only buy broad index funds to hold for years. You aren't a professional trader[1]. You don't know what you're doing. You will not beat the market on average.

[1] Unless you are. But most professionals are destroying value too.

https://mises.org/wire/markets-vs-socialism-why-south-korean-healthcare-outperforming-italy-covid-19?fbclid=IwAR38LEqQwdC4QP3EwPBtj1qU5r5xuHQL5ilEDjqkfWEb4nOJapN4dtZemv8

> If US officials wish to effectively handle the rising number of cases in big cities, they would do well to take lessons from South Korea and start freeing the market for healthcare rather than bungling a monopolized testing protocol that did not need to be monopolized, and thereby preventing people from getting tested. This would not immediately resolve the problems created by bad regulation in the past, but it would certainly reduce its negative consequences while improving the healthcare system's ability to deal with these sorts of crises going forward. It would also have the benefit of reducing the cost of healthcare generally.

#16062 This article is relevant. Can you come up with any criticism of it?

http://georgereismansblog.blogspot.com/2020/03/anti-price-gouging-and-preference-for.html

> #16062 This article is relevant. Can you come up with any criticism of it?

> http://georgereismansblog.blogspot.com/2020/03/anti-price-gouging-and-preference-for.html

Overall, I agree with the analysis presented in the article. I did have one quibble:

> For the hospitals are in a position to outbid virtually all other competitors for such things.

> For one thing, they could immediately obtain the supplies held by speculators, who, under present conditions, are prohibited from selling them, a situation that is insane.

> What is preventing these sales is an apparent preference for the suffering of hospital patients over the profit of the speculators, who have assembled the supplies the hospitals and their patients need.

I would guess that hospitals face various issues that would prevent them from obtaining supplies held by speculators such as the guy discussed in the NYT article (such as hospital policies, regulations, or liability concerns).

I read through the two pages (in the PDF) in Reisman's *Capitalism* on "The Tendency Toward Uniform Prices Over Time: The Function of Commodity Speculation". Haven't read the related analysis on oil shortages yet.

#16077 Indefinite means "lasting for an unknown or unstated length of time" (New Oxford dictionary). Maybe there's confusion about that. That's very different than forever. It means you don't automatically stop after a set amount of time or say "well it's been 3 weeks, that's a lot of time, so it's reasonable to be done now". The stopping or topic-changing conditions should not be based on time (or emotion).

Indefinite also doesn't mean you can't give up or fail so you'd be stuck working on it forever.

But giving up or failing should be a moderately big deal. A notable event, not a dime a dozen. It'd be a thing that goes on a list of projects and their outcomes and is considered important data about your life, capabilities, etc.

Tons of topics get dropped with no clear failure, no clear giving up, no clear outcome, and no data collection in order to identify patterns of failure and address them. This is an ongoing problem with ~everyone, year after year. I'm trying to deal with it better now.

#16081 You're wrong about how it (thinking, reason, learning, not overreaching, etc) works, how you could make progress, what to do, etc. But you don't discuss that either.

Your pessimism, negativity, etc., are totally unnecessary and avoidable. They are due to your own misconceptions that you are shielding from critical discussion. It doesn't have to be this way.

Economist George Reisman shared audio recordings of the lectures he taught at university:

https://georgereismansblog.blogspot.com/2020/08/reismans-final-years-university.html

#17608 On George Reisman's website on the left sidebar you can get (free):

Capitalism: A Treatise on Economics. I've read it and think it's exceptional. It's long and detailed; you can look up specific topics with the detailed table of contents, the detailed index, or electronic search. lots of sections are possible to read without reading all the prior text first.

Capitalism Short Answer Q&A 2500 questions with answer keys, organized by chapter of Capitalism

Economics self education program guide contains 1500 essay/study/review questions about Capitalism, organized by chapter

#20043 I've seen several things about this. I think it's bad but I don't know the degree of badness. Should I be making any changes to my life because of it? Major changes?

> **Because they don’t want more water and they do want more diamonds.**

That's basically what marginal utility says. more = marginal. want = utility.