barjon
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And just who has facilitated that if not government?
And just who has facilitated that if not government?
VielGeld
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I dunno, Ducati. That sounds like a very American view of the world.
There is no denying the power of the free market; that is one of the reasons why the US has been a superpower for as long as it has. I am also an advocate of efficient government that keeps its paws out of matters it doesn't understand.
But at the same time, you need an impartial third party to oversee regulations, provide basic infrastructure, as well as promote public education and health. Another benefit of government is its centrality. It can coordinate projects and make decisions on a bigger scale than individual city states as you say. It keeps people united. There are many societies that believe this as well, which is why the idea of government persists. I also think culture comes into it as well.
This cannot be an entirely economic decision, but I think that's a discussion for another time.
There is no denying the power of the free market; that is one of the reasons why the US has been a superpower for as long as it has. I am also an advocate of efficient government that keeps its paws out of matters it doesn't understand.
But at the same time, you need an impartial third party to oversee regulations, provide basic infrastructure, as well as promote public education and health. Another benefit of government is its centrality. It can coordinate projects and make decisions on a bigger scale than individual city states as you say. It keeps people united. There are many societies that believe this as well, which is why the idea of government persists. I also think culture comes into it as well.
This cannot be an entirely economic decision, but I think that's a discussion for another time.
The natural law and property rights is the facilitator of capitalism.
Government, far from facilitating capitalism has sought to live off of capitalism like any other parasite.
jog on
duc
new_trader
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Instead of just throwing in random one liners Jon why don't you explain how it is facilitated by Government through fiat money, and how it would be crippled by a gold specie standard?
Who would suffer under a gold specie standard? It certainly would NOT be the productive members of society, or the entrepreneurs, or the savers and investors. The only people who would suffer are the ones living off the Government printing press at the expense of others. The ones riding in the wagon instead of the ones pulling the wagon.
vg
Not really American, liberal, true original liberalism of the 18'th century, or as it is called now libertarianism.
Then essentially, we are in agreement.
Which should be the purpose of a free market money, that impartially allocates the factors of production, and a truly independent legal system based upon natural law, on a competitive, or free market basis.
I would argue that it persists, only at the point of a gun.
It is the division of labour that promotes 'society' and mutual co-operation and peace.
It's not, it's also a moral argument, which is Ethical in it's theory and discussion. Indeed, and the discussions are already touching upon this area.
jog on
duc
mg
Come now old chap, you are arguing the position or side of fiat, it is thus incumbent upon you to provide your best argument.
What you are really referring to are tariffs/subsidies, and 'protectionism' as policy. Ricardo exposed the fallacies of protectionism via the theory of comparative advantage hundreds of years ago.
Which are?
You have made a very 'general' statement, that is factually incorrect. In addition, as nt highlighted, you have also caught yourself in a logical contradiction.
jog on
duc
Come now old chap, you are arguing the position or side of fiat, it is thus incumbent upon you to provide your best argument.
What you are really referring to are tariffs/subsidies, and 'protectionism' as policy. Ricardo exposed the fallacies of protectionism via the theory of comparative advantage hundreds of years ago.
Which are?
You have made a very 'general' statement, that is factually incorrect. In addition, as nt highlighted, you have also caught yourself in a logical contradiction.
jog on
duc
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barjon
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I haven't suggested it would be crippled by gold standard, nor that it is fiat money that facilitates.
All I was doing was refuting the suggestion that governments' objective (by the use of fiat money) is to dun its citizens and rob them of what is rightfully theirs. On the contrary, I believe that all governments seek to facilitate the economic well-being of their citizens, albeit that some governments only go as far as necessary to protect their own elite and to avoid being overthrown by revolution.
It may be right that it is capitalism that is the driver and deliverer of economic growth, but it is governments that have facilitated that capitalism balanced by protecting its citizens from its (capitalism's) worst excesses.
Really?
Democracy is an abomination. Let’s examine ‘democracy’ as a monopoly, which it actually is:
Monopoly as an analytic a priori proposition: monopoly is an entity [institution] that exists in the absence of any market competition.
Defining ‘monopoly’ as an institution that can as a producer of goods and services [within its market], raise revenues through the restriction of supply: this is and must be due to an inelastic demand curve.
To gain a monopoly position, all competition must be eliminated. Free market mechanisms cannot succeed, nor be utilised to eliminate competition, as free market mechanisms rely upon ‘out competing’ the competition through ‘lower price, higher quality’ or a combination of the two. With ‘free entry’ to the ‘market’ as ‘profit margins rise’ due to an expansion of market share, or product dominance, competitors are attracted to the high returns available, particularly if the demand curve has areas of inelasticity.
Legal mechanisms can be utilised, as they rely upon an outside agency to provide the coercive power required to exclude all and any competition. Thus the only true monopolies are monopolies that exist under conditions of coercion. These monopolies will only possess monopoly power or advantage in an area where they have the support of the coercive power.
The ‘other’ way that monopoly area of influence, or market share can be gained is through the direct use of coercion, or physical force [or the threat of] against any and all competition. Assuming success, the institution then controls the market or territory that they can defend from other potential or actual monopolists.
We now have an area that supports say 100 monopolists, each with a territory that has an inelastic demand curve for our institutions goods and services, which happen to be quite similar in our 100 firms. As ‘competition’ is prohibited, legal power resides with each individual monopolist, the only method to remaining to drive expansion of territorial control and hence an expansion in revenues is through ‘war’.
Of course this is exactly the situation of the ‘State’ which historically consisted of ‘Kings’ and now are ‘governments’. There are some very important differences between the two forms of the ‘State’ however, as far as ‘government’ expansion is concerned, there are only two ways that they can expand their market share, direct war, or the threat of war, resulting in Imperialism.
Through history the theory of monopoly can be seen to drive the ever shrinking number of ‘States’ into ever larger territorial areas that are exploited by monopoly government. There have been stunning reversals, the Soviet Empire imploded of course, but the historical dialectic has been towards consolidation through war and aggression. The inelastic demand curve is inelastic as of course it is 100% coerced. The revenues generated are called ‘tax’.
Monopoly through coercion has a logical conclusion: one world government. Steps have of course been underway for a long time towards this ‘ideal’ using the fiat currency as the primary weapon. Bretton Woods saw the hegemony of the US. drive the implementation of the US dollar as the ‘world reserve’ currency, much as prior to WWI Britain held the unofficial world reserve currency.
jog on
duc
mg
This again can easily be refuted. I note that even the parable of the ant and grasshopper underlies the economic truth that it is ‘saving’ that creates security. So now let’s move forward and present the correct position in his three areas of contention.
First and foremost it must be stressed that in economics and other social sciences, it is not the ‘inductive method’ that has primacy, rather it is the ‘deductive method’ for the reason that in human affairs all causation is already known: viz. it is ourselves. Thus knowing the causation, we simply need to start from an axiom and deductively progress forward, resulting in truth statements. The theory is thus irrefutable. No amount of empirical evidence can gainsay true theory.
I start with production. For any production, the best method will be chosen. This will include the most up-to-date technology available. In addition the factors of production will be applied and mixed in the optimal fashion: land, labour and capital. The goal will be to produce the most ‘output’ at the minimum ‘input’. The last factor not mentioned in the ‘triad’ is time. The timeframe chosen will be the ‘shortest’ possible timeframe. This underlines the law that ‘present value’ is higher than ‘future value’.
From this we can state that any improvement in the ‘output’ must require a change in the inputs: land, labour, capital and time. Technology is usually quoted as being the most important factor. Technology is important, however it is not the critical factor, which can be illustrated by way of an example: Africa could have access to the technology of the ‘West’ but, without capital, no progress in production can or will take place. It is capital that creates the ability to produce.
As already stated, the ‘shortest’ time period will have been chosen, the most efficient productive process. Thus to increase ‘output’ even adding or subtracting other ‘input’ factors, there must be an increase in the time required to produce. Thus increased output requires additional time, or a longer waiting period for an increased ‘output’ to be produced.
Therefore our increased output results in an aggregate falling time preference amongst consumers. Thus the ‘originary rate of interest’ must fall, signaling the falling time preferences of consumers, who make available increased quantities of capital goods to be transformed into the higher ‘output’ of the longer production period.
Which brings us to the crux of the fallacy that government spending can promote, and is de facto responsible for increased ‘output’. Government spending needs to be defined. How do we separate government spending into ‘consumption spending’ and ‘investment spending’? Simply through an examination of the ‘revenues’ accruing to government. Investment spending will result in ‘investment income’ and consumption spending shortfalls will need to be financed through taxation. Therefore we can examine the empirical data to establish the type of income that government has generated.
Essentially then all government spending is serviced via taxation. Direct taxation via ‘income tax’ or indirect taxation via debt, which implies higher future taxes, or ‘inflation’ viz. money creation to devalue the debt burden. Thus we shall examine the theory of taxation with regard to the professors assertion that government spending via taxation, is the creator of increased production, which is the requirement to create wealth.
Through taxation government has increasingly destroyed the fundamental base upon which capitalism builds wealth. Taxation is as this post proves, illegal. In addition to being illegal, taxation also possesses these rather unfortunate traits: increase unemployment [ii] reduce productivity. Both these together result in decreased [wealth] production.
It is not the ‘type’ of taxation that is important, rather it is the ‘total’ taxation burden that is critical. Taxation takes numerous different forms: income tax [ii] inflation [iii] consumption tax [iv] subsidies [v] tariffs [vi] capital gains tax [vii] patents [viii] copyright [ix] minimum wages and [x] debt
Taxation is a ‘cost’ to the producer that is paid to government as tax revenue. This payment must be made in ‘present value’. By reducing the sum total of present value capital goods, the ability to engage in the allocation of present value capital goods to future value capital goods is reduced. Thus production through the raising of ‘time preferences’ will be reduced in the future, thus reducing supply, thus raising prices in consumer goods and services.
Through a reduction in future production, the employment that would have been created, now is not. If taxes are raised, then productive capital that ‘was’ profitable can be made ‘unprofitable’ and thereby creating unemployment. As I survey the data, the theoretical a priori of taxation becomes starkly apparent.
This is the contradiction. Taxation increases the consumption in ‘present value’ and thus by definition raises time preferences higher. To increase production, the opposite must occur: viz. time preferences must be lowered. QED.
jog on
duc
This again can easily be refuted. I note that even the parable of the ant and grasshopper underlies the economic truth that it is ‘saving’ that creates security. So now let’s move forward and present the correct position in his three areas of contention.
First and foremost it must be stressed that in economics and other social sciences, it is not the ‘inductive method’ that has primacy, rather it is the ‘deductive method’ for the reason that in human affairs all causation is already known: viz. it is ourselves. Thus knowing the causation, we simply need to start from an axiom and deductively progress forward, resulting in truth statements. The theory is thus irrefutable. No amount of empirical evidence can gainsay true theory.
I start with production. For any production, the best method will be chosen. This will include the most up-to-date technology available. In addition the factors of production will be applied and mixed in the optimal fashion: land, labour and capital. The goal will be to produce the most ‘output’ at the minimum ‘input’. The last factor not mentioned in the ‘triad’ is time. The timeframe chosen will be the ‘shortest’ possible timeframe. This underlines the law that ‘present value’ is higher than ‘future value’.
From this we can state that any improvement in the ‘output’ must require a change in the inputs: land, labour, capital and time. Technology is usually quoted as being the most important factor. Technology is important, however it is not the critical factor, which can be illustrated by way of an example: Africa could have access to the technology of the ‘West’ but, without capital, no progress in production can or will take place. It is capital that creates the ability to produce.
As already stated, the ‘shortest’ time period will have been chosen, the most efficient productive process. Thus to increase ‘output’ even adding or subtracting other ‘input’ factors, there must be an increase in the time required to produce. Thus increased output requires additional time, or a longer waiting period for an increased ‘output’ to be produced.
Therefore our increased output results in an aggregate falling time preference amongst consumers. Thus the ‘originary rate of interest’ must fall, signaling the falling time preferences of consumers, who make available increased quantities of capital goods to be transformed into the higher ‘output’ of the longer production period.
Which brings us to the crux of the fallacy that government spending can promote, and is de facto responsible for increased ‘output’. Government spending needs to be defined. How do we separate government spending into ‘consumption spending’ and ‘investment spending’? Simply through an examination of the ‘revenues’ accruing to government. Investment spending will result in ‘investment income’ and consumption spending shortfalls will need to be financed through taxation. Therefore we can examine the empirical data to establish the type of income that government has generated.
Essentially then all government spending is serviced via taxation. Direct taxation via ‘income tax’ or indirect taxation via debt, which implies higher future taxes, or ‘inflation’ viz. money creation to devalue the debt burden. Thus we shall examine the theory of taxation with regard to the professors assertion that government spending via taxation, is the creator of increased production, which is the requirement to create wealth.
Through taxation government has increasingly destroyed the fundamental base upon which capitalism builds wealth. Taxation is as this post proves, illegal. In addition to being illegal, taxation also possesses these rather unfortunate traits: increase unemployment [ii] reduce productivity. Both these together result in decreased [wealth] production.
It is not the ‘type’ of taxation that is important, rather it is the ‘total’ taxation burden that is critical. Taxation takes numerous different forms: income tax [ii] inflation [iii] consumption tax [iv] subsidies [v] tariffs [vi] capital gains tax [vii] patents [viii] copyright [ix] minimum wages and [x] debt
Taxation is a ‘cost’ to the producer that is paid to government as tax revenue. This payment must be made in ‘present value’. By reducing the sum total of present value capital goods, the ability to engage in the allocation of present value capital goods to future value capital goods is reduced. Thus production through the raising of ‘time preferences’ will be reduced in the future, thus reducing supply, thus raising prices in consumer goods and services.
Through a reduction in future production, the employment that would have been created, now is not. If taxes are raised, then productive capital that ‘was’ profitable can be made ‘unprofitable’ and thereby creating unemployment. As I survey the data, the theoretical a priori of taxation becomes starkly apparent.
This is the contradiction. Taxation increases the consumption in ‘present value’ and thus by definition raises time preferences higher. To increase production, the opposite must occur: viz. time preferences must be lowered. QED.
jog on
duc
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counter_violent
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Some excellent posts there ducati
Martinghoul
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I haven't actually finished responding to your previous posts. You're well ahead of me, but I will press on.
Firstly, I have stated that the competitive advantage isn't specifically something related to exports. The ability of the domestic agency to control money supply is the advantage. I am not really sure why you have launched into the discussion of how you perceive trade operates. I don't see the relevance of this. As far as I am concerned all you're doing is stating your conclusion as if it's a fact, which isn't particularly convincing. Moreover, apart from the other stuff, I find myself puzzled by the last passage. How is it possible to lower real prices without lowering nominal prices by creating inflation? That is a rather absurd notion, but maybe you have discovered a new economic paradigm.
You haven't actually demonstrated anything. You have stated that gold is better, according to some specific metric that you prefer. Again, you simply state that gold is good, fiat money is bad. That is not convincing.
Martinghoul
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You're roughly correct in terms of what I was referring to as industrial policy. However, yet again, you're arguing the exact same point that we have discussed repeatedly. Specifically, I agree that industrial policy can be abused and the extreme cases of these abuses are well-known (I guess that is why you have brought up Socialism). However, my point is different. I am saying simply that industrial policy is a tool that can be used by governments and some have been successful at it ("infant industry" policies, even though you may disagree with them, are effective). If your government gives up this capability in a competitive setting, it is sacrificing a viable tool, which may or may not come in handy, for the sake of principle. I don't think this is a good idea.
Well, the most obvious one is China. The less obvious one is Switzerland. The less contemporary examples can be found throughout history.
Well, apart from your assertion that this is "nonsense" and your general conviction that the government and everything it does is fundamentally evil, what possible evidence is there of this?
Martinghoul
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No, it isn't... But kudos for being so glib.
Martinghoul
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Thank you.
I have absolutely no idea what this has to do with anything that I have actually asked about. Why so many words when all I asked you for is some support for the categorical statement you have made? Empirical evidence or stuff of that sort, rather than words.
Firstly, no, the issues of externalities aren't necessarily related to property rights. Furthermore, even if we were talking about porperty rights only, I don't really understand this argument at all. Do you propose that the State give up its monopoly on "law"? If so, are you suggesting that the newly-minted, gloriously capitalist entity which will pick up the responsibility is not going to face the very same issue? Why? Finally, I really don't get where this whole "apologists for socialism" is coming from.
Oh, I am sooooo confused now. Are you suggesting that free markets will limit the size of firms and that will stop wars, because people will be confined to smaller social units? Am I to understand that you're proposing that free entry and competition will allow us to, effectively, go back to the good old days of the Ancient Greeks or Medieval Europe?
I am really not aware of ever talking about mkt failures and the other issues you mention. My only question here is who will be granting and enforcing property rights in this setup that you describe? Clearly, you're not really happy with giving this responsibility to government.
Erm, you have me very confused here. Are you suggesting that you can't think of an example of a war where the government is defending is citizenry from an external aggressor? I live in the UK and I seem to recall that there was something that went on arnd mid-20th century. Does everything you have said above apply to World War II? I don't know about you, but, living in the UK, I rather enjoy the fact that I get to speak English, rather than German.
Martinghoul
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I believe I have. I can do again, if you so desire.
No, that is not at all that what I am referring to, so I am afraid that your refrence to Ricardo is wasted on me in this particular case.
Well, de-industrialization of the economy, recession, depression, that sort of thing.
Well, how can a very general statement be factually incorrect? Surely that is more of a contradiction than what I said (which, actually, isn't a logical contradiction, no matter what n_t highlights).
Still, let me make my point even more clear and transparent. As I have said before, "fiat money" and the "gold standard" each possess distinct advantages, as well as flaws. By replacing "fiat money" with the "gold standard", you will be covering one tail risk (to use trading terminology). Namely, the possibility of abuse by the Central Bank. However, it's important to realize that this tail risk protection isn't free. Instead of the 'CB abuse' tail, you will now be short the other tail. Specifically, no domestic agency will have the ability to control money supply at the time of stress, when this ability is normally most needed. We should all choose what tail we want to be short. To me, the choice is relatively clear. This is the sole point I have been repeatedly making in this thread.
Martinghoul
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This has me all confused... I am not sure what the QED is all about. There's nothing in the above that actually responds to the point that I have made. It's, again, a whole lot of words, but I fail to see any substance whatsoever. When did I say anything about 'ants and grasshoppers', 'saving vs consumption', 'inductive' vs 'deductive' or the factors of production or any of this other stuff? Are you sure you're actually talking to me? I don't want to accuse you of anything, but it looks like it's been cut and pasted from somewhere. Maybe I am missing something...
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Martinghoul
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Come on, n_t. Surely this can't be serious...
This is very poor logic, indeed...
This is the similar poor logic again.
And this is stuff that conspiracy theories are made of...
ducati, in summary, having gone through your posts I foresee that we're not likely to have a very meaningful discussion, even though I have enjoyed it so far. It appears that your fundamental premises are a bit unusual and I am not sure we will be able to establish a basic common frame of reference. Still, no harm in trying...
mg
Must have missed it, I haven't seen much discussion on this thread in relation to that topic. If you know where it is point me in the right direction.
That's a start I guess, so let's move on.
Infant industries that require government subsidy, simply means that there is not sufficient demand for their supply of 'X" goods/services. Essentially then you are saying, ignore the market signal, government knows best, and will force via taxation and redistribution, the infant industry upon the economy.
You state that this is 'effective'. Really, how? Effective of/to what?
A viable tool for what? Forcing a redistribution that the majority obviously don't want? Are we talking about the 'principal' of liberty? If this is the case, I think that this is a very good idea, as subsidising infant industries that are unwanted/unneeded is not good economics.
jog on
duc
Must have missed it, I haven't seen much discussion on this thread in relation to that topic. If you know where it is point me in the right direction.
That's a start I guess, so let's move on.
Infant industries that require government subsidy, simply means that there is not sufficient demand for their supply of 'X" goods/services. Essentially then you are saying, ignore the market signal, government knows best, and will force via taxation and redistribution, the infant industry upon the economy.
You state that this is 'effective'. Really, how? Effective of/to what?
A viable tool for what? Forcing a redistribution that the majority obviously don't want? Are we talking about the 'principal' of liberty? If this is the case, I think that this is a very good idea, as subsidising infant industries that are unwanted/unneeded is not good economics.
jog on
duc
