Greenspan Advocates for the Austrian Model

Posted by mshupe 10 months ago to Economics
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I guess we need to do a better job of promoting Objectivist economics so that one of the original Objectivists knows who we are.

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  • Posted by 10 months ago
    Thanks Mike, excellent post. When you say Austrian economics is based on Kantian idealism, is that pertinent to the subjective theory of value? And while there are legacy horse and buggies, as there is a revival of analog vinyl records, haven't the ships only been repurposed for recreation? Regarding, society's resources, absolutely, and wasn't it Mises who debunked aggregate utility? I'm not being argumentative at all, just very interesting in understanding.
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    • Posted by  $  MikeMarotta 10 months ago
      Thanks. The idea of "subjective values" is Kantian, but I was thinking of the more basic fact that Mises derived his theories rationally, i.e., without referrent to empirical evidence. He said that was the strength of it, that it is not subject to physical limits, but is eternally true. That is the error of idealism. But, yes, as you point out, the theory of subjective values derives from that.

      That said, I do not know a good label for the fact that you and I have different objective values. We each seek to advance our own happiness, but how we do that is different.

      I can offer nothing on aggregate utility.I understand the problem from the statement, but I do not find any discussion in Human Action. (I have the scholar's edition.). Nothing jumped ouit at me when I googled "von mises aggregate utility."
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  • Posted by  $  MikeMarotta 10 months ago
    If you understand Objectivism, then you can identify the many errors in the article. For all of its strengths and virtues Austrian economics is based on Kantian idealism. Therefore, one must be careful to analyze what seems too easy to accept emotionally.

    "Creative destruction reallocates society’s resources from less productive pursuits to more productive ones—from spinning jennies to factories, for example, or from horse-and-buggies to motorcars."

    The concept of "creative destruction" as an intrinsic contradiction has some appeal for being heard in a public argument, but no such thing exists. We still have horses and buggies, just fewer of them. We still have spinning wheels, mostly as hobbies. The world has more sailing ships now than were dreamed of in 1500.

    Furthermore, "society's resources" is another floating abstraction. It sounds like an idea, but has no concrete referrent. Only individual resources exist.

    The article has very many similar problems throughout.

    "A better approach would have been to focus on the amount of capital that banks are required to hold in order to operate. In the run-up to the crisis, banks on average kept about 8 to 10% of their assets as equity capital. If regulators had forced them to keep 25%, or better still 30%, it would have radically reduced the probability of contagious defaults—the root of all financial crises."

    Best of all would be to have no laws requiring banks or anyone else to keep some magic number amount of cash on hand.
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