
Mises, Hayek, and Friedman - revorad
http://biophilic.blogspot.com/2010/12/mises-hayek-and-friedman.html
======
TomOfTTB
I'll be honest and say I only got through about half of this because of the
Author's tone. I'm sorry but if you're going to start your piece claiming one
of the most respected economists of the last century "didn't quite understand
banking" you're already treading on thin ice with me. Also it's hard to argue
how deep Hayek was and then call Mises a crank given the tremendous respect
both men had for each other (<http://mises.org/daily/3511>,
<http://mises.org/misestributes/misesonhayek.asp>)

Beyond that I didn't see much insight in this piece. It's not that it's wrong
it's just that it's essentially Keynesian talking points represented as facts.
I don't mean that pejoratively I simply mean the reason the Austrian and
Keynesian theories both exist to this day is because neither can be
definitively proven or dis-proven. He presents some valid points against the
other side but that's not exactly new insight

~~~
ebaysucks
Austrian Economics uses praxeology, logically necessary insights in human
action. Economics as a branch of logic.

All other schools (including Chicago) see economics as a branch of statistics.

This is a fundamental difference that almost nobody seems to realize.

~~~
philwelch
Economics isn't a branch of logic (or, for that matter, statistics) any more
than physics is a branch of mathematics. Rather, economists use logic,
statistics, mathematics, observation, and in limited contexts experimentation
as tools. It's a philosophical question of which tools to use that defines
Austrian economics. Austrian economics is _rationalist_. Rationalism consists
in choosing reasonable-sounding a priori assumptions and reasoning from them.
Whether you're Descartes saying "I think, therefore I am" and deriving "God
exists and is not an evil deceiver", or whether you're an Austrian economist
saying "humans take conscious action toward chosen goals" and deriving "the
gold standard is preferable to fiat currency", you're basically doing the same
thing.

The ideal economic theory would be empirical, observing economic behavior and
attempting to build models that fit to it. Both in philosophy and in the hard
sciences, empiricism has won out over rationalism for reasons any decent
philosopher or scientist could enumerate for you at length.

Behavioral economics is probably the best attempt at this ideal. You can view
it either as a feature or as a bug that it doesn't tend to draw grand
macroeconomic conclusions you can use to try and win political arguments.

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dpatru
The author calls this statement by Rothbard "shocking and typically blind":

"In a developing free-market economy unhampered by government-induced
increases in the money supply, prices will generally fall as the supply of
goods and services expands. And falling prices and costs were indeed the
welcome hallmark of industrial expansion during most of the nineteenth
century." Planning for Freedom, p.247

The author explains that falling prices of this sort "exhibits an exponential
process of sorts when it is rapid . . . . As the currency becomes more
valuable, it gets horded, and less is used for economic activity or lent out.
What is the point if just holding it gets you regular returns? Less exchange
leads to more deflation, and the system seizes up with nothing happening,
unemployment prevalent, and no easy way out."

So, to recap, the author seems to think that technological progress resulting
in greater societal wealth and lower prices result in "nothing happening" and
"unemployment prevalent."

~~~
philwelch
You're being massively dishonest if you're going to conflate "technological
progress resulting in greater societal wealth and lower prices" with "monetary
deflation". In fact, looking at some historical inflation data
([http://inflationdata.com/inflation/Inflation_Rate/Historical...](http://inflationdata.com/inflation/Inflation_Rate/HistoricalInflation.aspx?dsInflation_currentPage=0)),
monetary inflation tends to correlate with technological process and economic
growth, while monetary deflation tends to correlate with recessions and
depressions.

A growing economy paired with a fixed monetary base, incidentally, will end up
resulting in monetary deflation, which will more likely than not put an end to
the growing economy. That was the author's point, and it's borne out by
historical data as well as nearly all contemporary economic theories
(including, perhaps to the author's surprise, the theories of Milton Friedman
himself).

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ebaysucks
Here's the comment I left:

You need to learn about how free market law works.

Negative externalities are compensated for if people desire it and if it's
technologically feasible.

Moreover, you are assuming the "oversight" will be rational, directly
contradicting public choice theory.

Edit: tl;dr: Don't waste your time reading this Keynesian Econ 101

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brc
Midway through this wandering missive I was unsure as to what point the author
was making. Although, quite obviously, a concerted effort to paint Mises and
Ron Paul as cranks and weirdos would set the tone for the rest of the article.
In the end it was just a call for more Keynes (or what passes for Keynes,
these days) and to invent unnatural markets like a 'carbon' market to solve
unproven and unprovable problems. It also talks about German hyperinflation
like a problem that can't possibly happen again because we've somehow evolved
past it. It's a fallacy to think that somehow, we're collectively smarter than
our grandparents when we all share the same human traits.

My main problem with this (apart from the unnecessary smearing) is that it
continues with the thought that current market failures (housing, derivatives
et al) is from letting free markets go. When in reality it is because of
excessive intervention in markets by the state. Which proves Hayeks point
perfectly.

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plesn
Aah, economy on HN… : ready, fight! More seriously, as Einstein put it quite
briefly, economy is not a science because it is not testable. I would even
add, following some philosopher's wisdom, that behind all those pretty
theories you can sense their authors' fears and desires (plus some coherence
and maybe even some stats…).

~~~
brc
Economic theories cannot be tested, but there is definitely merit in
historical evaluation of policies implemented.

~~~
plesn
Agreed, but precisely only through the mirror of our own desires and fears :)

