Privatise profit, socialise risk


I am not an economist.
Never studied economics.
The graphs, the analyses, the spreadsheets, the intricate data fine tooth-combing is not something I do on a regular basis. Even if I had studied economics, I might have a better understanding of the language we use to describe capital flow and its merits and contradictions; but I can’t honestly say i’d understand economics as a science, any better. When the Queen asked top economists at the London School of Economics, why they didn’t see the credit crunch coming, they couldn’t answer. They knew nothing. All those years at a top economist school taught them nothing when it came down to it. So therefore, I, like everyone else, can only comment on the relationship between society and economics as I see it, from my perspective.

This is how I interpret the financial crash.

The first thing to note, is that this isn’t Capitalism. This is a system of perpetual yet flimsy consumerism. It is not a free market system. It is a Financial Sector system.
The obvious link between this crises, and society as a whole is also the catalyst for the problems. The subprime mortgage market began plunging around 2005. It was largely ignored because those who were losing their homes and livelihoods in cities like Detroit in the US, were predominantly Hispanic or African American. The media did not question it. The economists did not question it. The Bush administration did not question it. But it was a small basement fire that before long would engulf the World.

When white middle class towns and cities around California for example started to experience a wave of foreclosures, and people started owing more than their properties were actually worth, the World took note. Freddie Mac and Fannie Mae all but died. Lehmann was allowed to collapse. AIG, who snook onto the gravy train, expecting the housing market to be on an upward turn forever and ever, were bailed out and then faced a liquidity crises. It’s a funny thing, because this started to happen in 2007. Two years after the poorer black communities felt the pinch hard. Suddenly millions were losing their homes in the US. This didn’t appear to upset those who actually caused the mess in the first place.

Wall Street gave out bonuses of well over $30bn in 2007, despite crushing the entire system. Often you will hear Right Wingers defend these obscene bonuses with “you have to pay the best to get the best”. These people aren’t the best. If Wayne Rooney single handedly drives Manchester United down into the First Division, from the Premiership and then the Championship, he isn’t likely to get a massive bonus at the end of it.

The point of neoliberalism today, as it was in the 1980s, is to protect financial institutions at all costs. An it has worked. It concentrates wealth within the Nations with big powerful financial institutions. A report by the World Institute for Development Economics Research at United Nations University found that 1% owned 40% of global assets in the year 2000, and that the richest 10% of adults own 85% overall. In the US, it was found that 38% of the Nation’s wealth is owned by 1% of the population.

A similar study from the Federal Reserve shows that between 1989 and 2004:

“there are indications that wealth became more concentrated”

and

“from 1992 to 2004 the wealth share of the least wealthy half of the population fell significantly to 2.5 percent of total wealth”

During the 1980s, real wage growth stagnated both here in the UK and in the US. Money did not trickle down. This great neoliberal Thatcherite/Reaganomic experiment actually did nothing but make the wealthy, very very wealthy. The poverty rate under Thatcher was higher than it has been since. The wages and assets of the guys at the top increased massively at the same time as the average workers’ wage stagnated. You see for example, the fact that you have to earn far over the National average to be able to afford a home now. We cannot afford homes, and we are working in the UK the longest hours in Europe. We have nothing to show for it, except stagnating wages, and massively inflated wages for the guys at the very top. But, the propaganda of Neoliberalism, tells us that they deserve their wealth, and we deserve nothing. So we get nothing. This creates a problem, because the workers are in the majority and they are where the demand comes from for the economy to flourish. How do you fill the gap between keeping the wealthy very wealthy, and making sure the masses can afford to consume? Well, if you’re a financial institution you employ an idiot to come up with the idea of easy credit. Give everyone a credit card. Give everyone store cards. Give everyone subprime mortgages. You are essentially giving people money that doesn’t yet exist, in the optimistic view that everything will be okay, and the money will exist sometime in the future. I was offered a Student Credit Card with £1500 on it. I’m 24, but presumably my bank had also offered this non-existent money to 18 year olds. They are only just allowed to legally buy alcohol, and banks are already luring them into this hellhole of consumer capitalism.

David Cameron, when accused of socially cleansing London of poorer people, with his plans to cut housing benefit, said:

“The point everyone in this House has got to consider: are we happy to go on paying housing benefit of £30,000, £40,000, £50,000?

“Our constituents working hard to give benefits so people can live in homes they couldn’t even dream of? I don’t think that’s fair.”

This is interesting for a few of reasons. Firstly, housing benefit has only gone up recently, because many people have been kicked out of their jobs as a result of the failings of the Neoliberal system David Cameron holds so dear. The benefit is a safety net for those who were unfortunate enough to lose their jobs. It is fine, if you managed to escape the chop, and can still afford your house. But no one knows what the future brings. What if double dip recession hits as a result of these cuts the Coalition are introducing? A lot more people will lose their jobs, and wont be able to find one for quite some time, when 10 or 12 people are chasing the same job. So, do they get kicked out of London too? They aren’t scrounging. They are victims of a crises of Neoliberalism.

Secondly, the comment suggests that David Cameron sees no inherent problem with the way the housing market actually works. He hasn’t said he’ll make it easier for people to be able to actually afford a house. He simply offers ways to prop up a grossly overvalued housing market. The reason that “constituents working hard” can’t afford home they “even dream of” is because the Tories of the 1980s sold all social housing, and the Financial Institutions have been ripping people off ever since. Apparently, Cameron has no issue with this.

And thirdly, kicking the poor out of London isn’t going to free up housing for Cameron’s “hard working constituents“. These hard working people wont suddenly flock to the City of London for homes that are now magically cheaper; purely because these hard working people are having to deal with stagnated wages, inflated prices, and a mass of debt encouraged by the Tories, Labour and the Banks for thirty years. The homes will be bought up by property developers, and people who want nice little London bachelor pads, becoming a city of croissant-at-Canary-Wharf-eating businessmen.

British households, on average, tripled their debt over the past thirty years, mostly housing market debt. They had to, in order to keep up. Now, what happens what you can no longer pay that debt back? The subprime crash happens. And then suddenly banks stop lending, because they have no money themselves. They gave out this fake money, that not only didn’t exist before, but doesn’t exist when they suddenly need it. So now business can’t borrow. So unemployment shoots up. But then demand across the marketplace falls, because people have less and less disposable income. So businesses go bust. Good times!

Millions became unemployed, millions lost their homes, the suicide rate shot up, the homeless rate was at a forty year high, and yet bonuses on Wall Street in 2008 were close to $32bn. Quite a nice rewarded for ruining lives.

Consumerism obviously can only exist and perpetuate if there is some sort of emotional attachment to it. The need to “fit in”. I HAD to have Nike trainers at school because kids have their own social heirarchy going on, and we all have to try to fit in with it. We are what we own, that is how consumerism, supported by governments and the media have presented life. Volvo embodied this idea beautifully, with the slogan “Life is better lived together”. We need to buy an XBox 360 because all our friends play online together, we don’t want to be left out. How can we afford it? Ah yes, student credit card. Or, buy on finance, on which you pay about one and a half times as much as you would have done if you’d have brought it from a shop. Easy credit rears its ugly head once more, to ease our need to “fit in”.

The Financial institutions keep getting fatter that way. Wealth becomes very concentrated. Capital becomes just as powerful and destructive, as the Unions were in the 1970s. This isn’t helped by the fact that businesses everywhere, and in fact, our consumer haven itself, relies on the Financial sector. The sector truly is too big to fail. They weren’t lying. Which means those working within the Financial sector are very very powerful people. And so people start to pump money into the Financial sector.

A few economists have pointed out, that although capital accumulation appears limitless, when you start to make a lot of money, you start to look for other avenues to invest in, in order to get one over on your competition. You need to expand. But there are limits to expansion (scarcity of labour supply, consumption, production etc). But those limits are barriers that need to be broken, according to Capitalist thought. Marx stated that “Every limit appears, as a barrier to be overcome” as being a massively destructive force at the heart of the Capitalist ideal. The consequence of being unable to use this mass amount of surplus profit in expansion, was that more money was pumped into speculating on the stock market, in unproductive ventures with absolutely no social good. When the stock market tanked, the money tanked with it.

When an entire financial system is built essentially on fake money, it is no wonder it didn’t last. For Nobel prize winning economists and top level financial experts at the Bank of England or the Federal Reserve, not to notice this, is a massive failure and quite frankly, disastrously unnerving. This isn’t Capitalism. It is a financial sector consumer economy. And out of nowhere, its failings are socialised. Suddenly we blame the public sector. Suddenly government spending on help for single mums has to be cut. Why? What have they done? They didn’t gamble away the Nation’s money on dodgy packages and risky easy credit. In fact, they took on the easy credit, because without it, they can’t afford to eat, what with wages stagnating across the board, and unemployment at a decade long high. Irresponsibility in the Financial sector has been ignored, and blamed entirely on the public sector.

That is how I viewed the crises.

Advertisements

12 Responses to Privatise profit, socialise risk

  1. Black Flag says:

    Futile

    When the Queen asked top economists at the London School of Economics, why they didn’t see the credit crunch coming, they couldn’t answer. They knew nothing. All those years at a top economist school taught them nothing when it came down to it.

    Had the Queen asked an Austrian-trained economist, she would have had her answers.

    They did see it coming.

    They told everyone, but no one listened because everyone does not like the truth when the truth is harsh.

    Keynesian theory says the truth is not immutable, that by the hand of government printing of money, the truth can be changed to being soft and easy instead of hard.

    When the truth appears, and it is harsh, those that fell for the lies suffer worse.

    As for the rest of your post, it is accurate enough.

    The system exists for the profit of the elite – a multi-pillar platform of mercantilism, populism and government interventions.

    In the end, those that believe they can get something for nothing will find how expensive the cost had been.

  2. Charles says:

    Source
    http://econfaculty.gmu.edu/bcaplan/whyaust.htm
    Quote
    “Mises and Rothbard certainly produced an original alternate paradigm for economics – and applied this paradigm to a number of interesting topics. Unfortunately, the foundations of their new paradigm are unfounded, and their most important applied conclusions unsound or overstated. The reasonable intellectual course for Austrian economists to take is to give up their quest for a paradigm shift and content themselves with sharing whatever valuable substantive contributions they have to offer with the rest of the economics profession – and of course, with the intellectually involved public. In sum, Milton Friedman spoke wisely when he declared that “there is no Austrian economics – only good economics, and bad economics,” to which I would append: “Austrians do some good economics, but most good economics is not Austrian.”
    Quote end.

    Source
    http://www.gmu.edu/departments/economics/bcapla/ausfin2.doc
    Quote
    “Mises, Rothbard, and Kirzner make an impressive attempt to produce a sound alternative foundation for economics; yet in the final analysis, their proffered foundations are incorrect.”
    End quote.

    From the post above.
    “Had the Queen asked an Austrian-trained economist, she would have had her answers.

    They did see it coming.”

    So did all the communists on the china daily forum, and they understood why it was happening too many years before it happened. Inbetween calls for, “world socialism” of course as a fix and “amerikan will fall” etc.

  3. Quite a detailed post for someone who doesn’t know much – very well written. I can only agree. I have read recently about the mechanics of crashes – not my usual reading but actually quite interesting. And it’s essentially like gambling until everyone panics. And ‘socialise risk’: yes, the poorer 97.5/100 are the ones who pay for the play of the elite. What to them is a game is life and death to billions.

  4. Black Flag says:

    Charles,

    Yes, most economists deride Austrian economists. If you actually investigated Keynesian complaints about the Austrians – instead of merely copy/pasting someone else’s text – you’d discover that the Keynesian complaints are actually mere strawmen.

    As your authors, too, like most economists, were completely out to lunch regarding the current economic crisis. Only the Austrians offered the warnings, the causes and the accuracy of effects.

    The Chinese did not see “anything” either.

    They are as mercantilist and Keynesian as the west – and will, eventually, suffer all the boom/crack-ups the West suffers. It will happen as sure as the sun shines – if you are Keynesian adherent.

  5. Charles says:

    I am not a keynesian adherent, or any other school.

    “instead of merely copy/pasting someone else’s text – you’d discover that the Keynesian complaints are actually mere strawmen.”

    Would you like me to post them in my own words and create many pages of posts instead? Nope it better just to post sources, than waste time on reinventing the wheel. Some Keynesian complaints are damning.

    Here is the chinese predicting..
    It’s time to take seriously a US-led global recession Lau Nai-keung
    http://www.chinadaily.com.cn/english/doc/2005-10/06/content_482807.htm

    Who is Lau Nai-keung?

    http://english.peopledaily.com.cn/200703/01/eng20070301_353252.html

    Date is 2005-10-06 07:37. Take a look yourself, what did they get wrong?

    The Austrian approach to philosophy is a very old one: Rationalism. You have to go back to the 17th and 18th centuries to find when it was last considered a serious philosophical movement. It was widely abandoned after its inadequacies were laid bare by other schools of philosophy: Empiricism, Positivism, and most famously by Immanuel Kant’s Critique of Pure Reason. Philosophy has progressed tremendously since Rationalism; the Austrian approach is a relic of history.

    The problem with rationalism is that it makes the search for truth a game without rules. Rationalists are free to theorize anything they want, without such irritating constrictions as facts, statistics, data, history or experimental confirmation. Their only guide is logic. But this is no different from what religions do when they assert the logical existence of God (or Buddha or Mohammed or Gaia). Theories ungrounded in facts and data are easily spun into any belief a person wants. Starting assumptions and trains of logic may contain inaccuracies so small as to be undetectable, yet will yield entirely different conclusions.

    In fact, if we accepted all the tenets of the Austrian School, we would have a second reason why it fails to qualify as science. To be a science, a school must produce theories that are falsifiable — that is, verifiable. If a theory’s correctness or falseness cannot be verified, then it is not science. Perhaps it’s religion, or metaphysics, or an unsupported claim. Austrian economists make claims about the market (such as markets know better than governments), but then deny us the tools for verifying those claims (such as statistics). One might ask: how do they know?

    Austrians claim to know these things by logic. But although their literature frequently evokes “a priori” knowledge, this term appears to be misused. Humans are not born knowing that “two plus two equals four.” It is something they must learn from their environment, namely, school. Forging this learned knowledge into axioms comes later, and then through a process of trial and error. So in this sense, “a priori” knowledge doesn’t even exist, unless one refers to a very basic level of knowledge capability, such as the physical construction of the human brain or animal instincts.

    Austrians may be using the term “a priori” to mean logical proofs or axioms, such as “If A=B, and B=C, then A=C.” But if Austrians were creating economic axioms that were true by logical force, then the Austrian School would become world famous overnight, whether mainstream economists liked it or not. In truth, Austrian journals are not filled with these kinds of axioms. Their arguments are really no more than theories that are guided or tested by logical proofs. Again, that’s no different from what religions do. The fact that we have thousands of different religions in the world is remarkable evidence of the fallibility of this method.

  6. Black Flag says:

    Charles,

    Would you like me to post them in my own words and create many pages of posts instead? Nope /i>

    Yep.

    The reason:
    it proves you understand what you are talking about.

    Right now, you do not understand what you are talking about. You merely cut and paste another idiot’s work, thinking that simply because it is in a book, it must be right.

    When you decide to take the time to understand the economic theories you are presenting, I’ll be waiting to discuss them with you.

    But right now, I’m wasting my time.

  7. Charles says:

    “The reason:
    it proves you understand what you are talking about.”

    Fell for it, personal attack someone else m8. You cannot attack the subject matter so going for some smear tactics are we.

    You accept a priori in economics but try to reject it for god when you cannot logically prove his existence. You take the position that logic cannot explain everything but austrian school claims to know these things by logic.

    A set of axioms is any collection of formally stated assertions from which other formally stated assertions follow by the application of certain well-defined rules.

    In this view, logic becomes just another “formal system”. And money is a set of numbers.

    I now use Godel’s Incompleteness Theorem. Godel’s First Incompleteness Theorem states any adequate axiomatizable theory is incomplete.

    I then use Godel’s Second Incompleteness Theorem. In any consistent axiomatizable theorem the consistency of the system is not provable in the system.

    Remember in logic, a consistent theory is one that does not contain a contradiction. You state that your system is like the laws of nature and is true because your system is self evidently true.

    This becomes fatal to you now because a priori knowledge in logic is knowledge that exists in a person’s mind prior to, and independent of, outer world experience. This means you are creating a thoery based on subjective awareness and anything can be logical if you accept the underlining assumptions. Remember you had no problem with this when claiming moral subjectivism.

    So your theory is incomplete and cannot be proven to be consistent. It cannot be proven to be consistent within itself and becomes unprovable now because austrians reject the attempt to learn economic laws through experiment or real world observation. You are traped within your theories box.

    Within economics, Austrians favor a method called “apriorism” over the scientific method. The mainstream approach is inductive, and the Austrian approach is deductive. You assume the only true economic laws are those based on first principles, these are assumed to be true but are unprovable within logic.

    Thus you cannot prove validity. Nor perhaps can you prove every truth about what it describes. It is both incomplete, unprovable and not able to be verified by experimentation or prediction because that is rejected. Burden of proof leaves you to prove the unprovable and so your position is unfound.

    “Right now, you do not understand what you are talking about. You merely cut and paste another idiot’s work, thinking that simply because it is in a book, it must be right.”

    Basically you are falling back on ad hominem, posting sources is legitimate if relevant to the issue.

    “When you decide to take the time to understand the economic theories you are presenting, I’ll be waiting to discuss them with you.

    But right now, I’m wasting my time.”

    I have read much of the austian school and I can tell you they are no different than any other religion I have seen.

    Problems I have found in your position,

    There is a basic flaw in the “absence of force” requirement, you make this all the time. The problem is that all property rights are maintained and defended by force, or the credible threat of force.

    All property is protected by police and military forces, and violations of property rights result in the appropriate forceful response.

    Therefore, the idea that a land of perfect property rights can exist force-free is either a giant self-contradiction or hopelessly utopian.

    Austrians commit the sin of basically calling for utopian starting conditions before your model will work as advertised.

    1) No force: – Force includes force by individuals in the form of theft and so forth, and force by the government in the form of taxation, regulation, and so forth.

    Using this all market failures can be blamed on the fact that we have a government, regardless of the actual level of government involvement in the failure because the perfect model cannot exist with government (force).

    But what if the U.S. decided to become libertarian, and adopt an Austrian economic policy?

    The assuption that zero force is require would still protected from accusations of failure, because then you can always blame criminals for wrecking the market process.

    This theory would therefore serve to justify a heightened “War on Crime”, under the new system.

    Considering the economic and demographic groups popularly associated with crime, there then becomes possibilities for demagoguery and scapegoating in the event the new economic system turned out to be inherently flawed.

  8. Black Flag says:

    Charles

    “The reason:
    it proves you understand what you are talking about.”

    Fell for it, personal attack someone else m8. You cannot attack the subject matter so going for some smear tactics are we.

    Weak counter, Charles.

    I insist on your own words – to demonstrate your understanding – otherwise you cannot understand my response. You will never know -for yourself- what I am saying.

    As your tactic of “cut/paste” is irrelevant in any format of debate, it is irrelevant here.

    You accept a priori in economics but try to reject it for god when you cannot logically prove his existence.

    Huh? What?

    You take the position that logic cannot explain everything but austrian school claims to know these things by logic.

    See – this is EXACTLY what I mean.

    You do not understand.

    Godel never said logic cannot explain.
    Godel never said reason cannot explain.

    He said that some things that are true cannot be proven.

    You cannot discern the difference between these three previous statements.

    A set of axioms is any collection of formally stated assertions from which other formally stated assertions follow by the application of certain well-defined rules.

    You do not understand what an axiom means.

    Axiom – or postulate is a proposition that is not proved or demonstrated but considered to be either self-evident, or subject to necessary decision. Therefore, its truth is taken for granted, and serves as a starting point for deducing and inferring other (theory dependent) truths.

    A set of axioms is an irrational set. You cannot have multiple starting points in a rational set.

    A rational set can only have one axiom.

    Geometry does not have multiple axioms – it has exactly one – “there exists a point”.

    In this view, logic becomes just another “formal system”. And money is a set of numbers.

    You do not understand what money is.

    Money – the most valued good in an economy.

    Money is just an economic good like any other economic good, and obeys the laws of economics like all economic goods.

    It is merely the most valued economic good by the People in that economy.

    I have a post on my blog explaining this in detail:
    http://freedomfliesblackflag.wordpress.com/2010/01/18/what-is-money/

    I now use Godel’s Incompleteness Theorem. Godel’s First Incompleteness Theorem states any adequate axiomatizable theory is incomplete.

    The axiom of Economics is this:
    “Man acts with a purpose”

    Now, from that axiom – organize your economic theories.

    This becomes fatal

    What is fatal is your misunderstanding of the concept of:
    – axioms
    – set theory
    – Godel’s Theorem
    – economic goods
    – money
    – axiom of Economics.

    Within all that confusion, it is of no wonder you do not understand much of this topic.

    Within economics, Austrians favor a method called “apriorism” over the scientific method. The mainstream approach is inductive, and the Austrian approach is deductive.

    Correct. This is why the mainstream is so out to lunch.

    Economics is not a physical science, therefore inductive reasoning is unavailable. That is, you cannot experiment on humans or their economy to determine cause/effect. No experiment is possible or exists. All economics therefore is tested after the effect.

    It therefore must be deduced from a root axiom.

    The Austrians using deduction predicted certain economic outcomes. These outcomes appeared.

    The Keynesian acted experimentally and predicted certain economic outcomes. None of these outcomes appeared.

    Therefore, Austrian theory have been validated and Keynesian theory refuted.

    You assume the only true economic laws are those based on first principles, these are assumed to be true but are unprovable within logic.

    There is no assumption. There is only one axiom, as provided above.

    Austrians commit the sin of basically calling for utopian starting conditions before your model will work as advertised.

    You do not understand utopia. Go read St. Thomas More and then describe Utopia

    Second, you are using the Nirvana Fallacy – that is the demand of perfection.

    Since no human system can be absolutely perfect, your insistence of perfection is a fallacy.

    What is provided, however, is the optimum that can be achieved by the human mind.

    1) No force: – Force includes force by individuals in the form of theft and so forth, and force by the government in the form of taxation, regulation, and so forth.

    Correct.

    Coercion distorts the free will of a man.

    Thus, if the premise is “a man acts with a purpose” it is perverted to “a man acts for a purpose of another man”.

    This perversion of the axiom of economics perverts economics.

    As I’ve posted before – if force is used in an economy, it can no longer be called “a free market economy” – it is now “something else other than a free market economy”

    Using this all market failures can be blamed on the fact that we have a government,

    That is not true.

    Austrians also point to the possibility of market failures due to natural events, such as floods, droughts, etc.

    It is true that baring natural disasters, the only other cause of market failure will be due to be coercive forces, like government.

    To a point, the only things that can cause a market failure is an event that impacts ALL the economy at the same time – natural disasters, and/or the violent force of government

    You can argue that government is a natural disaster – and I would be hard pressed to argue against you.

    regardless of the actual level of government involvement in the failure because the perfect model cannot exist with government (force).

    You do not understand the concept of perfect, and as a result, misapply the concept here.

    As already posted, there are other causes of market failure other than government violence.

    That does not, however, dispel the causes of market failure due to government.

    But what if the U.S. decided to become libertarian, and adopt an Austrian economic policy?

    They did for a short while and became the world’s most powerful economic force in history.

    The assuption that zero force is require would still protected from accusations of failure, because then you can always blame criminals for wrecking the market process.

    No.

    No decentralized, disorganized force of violence can dominate an economy.

    Only a centralized, organized force of violence can dominate an economy.

    Criminals are marginalized by society
    – they are subdued, attacked, shunned, banned, killed or jailed – all actions that mitigate their damage.

    Government marginalizes society
    – it subdues free men, attacks non-violent men, etc – and as such directly and systemically distorts an economy.

  9. Charles says:

    “Weak counter, Charles.

    I insist on your own words – to demonstrate your understanding – otherwise you cannot understand my response. You will never know -for yourself- what I am saying.

    As your tactic of “cut/paste” is irrelevant in any format of debate, it is irrelevant here.”

    Getting desperate are we? Cut/paste even if I was, does not undermined the arguement I am putting forward. You have to attack the arguement, this is a straw man and yet you think it is a great argument. What fail, you are just attacking me personally as someone who does not know anything so you can dismiss my arguments without having to prove your own.

    “See – this is EXACTLY what I mean.

    You do not understand.

    Godel never said logic cannot explain.
    Godel never said reason cannot explain.

    He said that some things that are true cannot be proven.”

    Wrong.. you dont know what you are talking about. He said that there are things that you can prove, provability within a formal system but the truth of whcih cannot be proven within that system. That problem with using this with god is there is no provability within the system and thus god cannot be a truth that cannot be proven. The statement, “This god is no provable”. Is a truth under this system as provability can be shown by absence but it, itself cannot be proven within the system.

    “You cannot discern the difference between these three previous statements.”

    You dont understand Godel.

    “You do not understand what an axiom means.”

    Yes I do.

    “Axiom – or postulate is a proposition that is not proved or demonstrated but considered to be either self-evident, or subject to necessary decision. Therefore, its truth is taken for granted, and serves as a starting point for deducing and inferring other (theory dependent) truths.”

    “Therefore, its truth is taken for granted” the part you miss everytime and if it cantradicts the real world which yours does its proven wrong.
    Quote from wiki as well
    “Some statements in a theory are included without proof (these are the axioms of the theory), and others (the theorems) are included because they are implied by the axioms.”
    Quote end.

    “A set of axioms is an irrational set. You cannot have multiple starting points in a rational set.”

    “A rational set can only have one axiom.”
    There can be more than one and then the implied theorems.

    “Geometry does not have multiple axioms – it has exactly one – “there exists a point”.”

    Yet again wiki and Geometry, Euclidean geometry uses five.

    “Axioms

    Euclidean geometry is an axiomatic system, in which all theorems (“true statements”) are derived from a small number of axioms.[6] Near the beginning of the first book of the Elements, Euclid gives five postulates (axioms) for plane geometry, stated in terms of constructions:[7]

    Let the following be postulated:

    1. To draw a straight line from any point to any point.
    2. To produce [extend] a finite straight line continuously in a straight line.
    3. To describe a circle with any center and distance [radius].
    4. That all right angles are equal to one another.
    5. The parallel postulate: That, if a straight line falling on two straight lines make the interior angles on the same side less than two right angles, the two straight lines, if produced indefinitely, meet on that side on which are the angles less than the two right angles.”

    “You do not understand what money is.”

    Colourfull toilet paper, not so good a lighting fires.

    “Money – the most valued good in an economy.”

    “Money is just an economic good like any other economic good, and obeys the laws of economics like all economic goods.”

    From Money as an Economic Good – Ludwig von Mises, The Theory of Money and Credit? Chapter 5 maybe? Laws of economics, what laws you have proven none.

    Here is a person with a PHD taking the piss out of it.

    “It is merely the most valued economic good by the People in that economy.”

    “I have a post on my blog explaining this in detail:
    http://freedomfliesblackflag.wordpress.com/2010/01/18/what-is-money/

    “The axiom of Economics is this:
    “Man acts with a purpose”

    Now, from that axiom – organize your economic theories.”

    “What is fatal is your misunderstanding of the concept of:
    – axioms

    You stated there must be only one axiom and you gave an example both are wrong.

    – set theory

    Your economic school rejects mathematics and science in economics.

    – Godel’s Theorem

    You used it wrong in the god bedate!! lol and every time you post you show you dont understand it!!

    – economic goods

    We have not talked about it yet, you just created that straw man above remember.

    – money

    See answer to economic goods.

    – axiom of Economics.

    See answer to economic goods.

    Within all that confusion, it is of no wonder you do not understand much of this topic.

    Yet another straw man argument.

    “Correct. This is why the mainstream is so out to lunch.”

    Many Keynesian and others predicted a crash.

    “Economics is not a physical science, therefore inductive reasoning is unavailable. That is, you cannot experiment on humans or their economy to determine cause/effect. No experiment is possible or exists. All economics therefore is tested after the effect.”

    Burden of proof is on you to prove that is the case, it is accepted that anything that can be explained in “laws” can be explain in science. You contradict yourself as well “Economics is not a physical science” therefore your laws of economics are not like the laws of nature (you say this often) and there cannot be an evident truth that they exist. Prove them.

    “It therefore must be deduced from a root axiom.”

    Axiom equals assuptions, with are unprovable if you use just the method of a priori reasoning (apriorism).

    “The Austrians using deduction predicted certain economic outcomes. These outcomes appeared.”

    Austrian school position is you cannot prove way the economic system works by real world events, so they reject science etc in economics because human action is to complex to explain. You are pointing to objective event and accepting it as proof, the problem here is the position of the austrian school takes. Even if you where right you cannot link the real world to your thought experiments because the austrian school does not employs any method to validate this link. You can only say that events just happen to meet what your theories expect but you cannot say that they happened because your theories predict them. Your dont get to validate every retarded idea because you manage to find sometimes correlation in the real world. To add proof that some good correlation exists between theory and events over time you would need to use statistics. The austrian school does not use statistics.

    Within economics, Austrians favor a method called “apriorism.” A priori knowledge is logic, or knowledge that exists in a person’s mind prior to, and independent of, outer world experience. For example, the statement “two plus two equals four” is true whether or not a person goes out into his garden and verifies this by counting two pairs of tomatoes. What this means is that Austrians reject the attempt to learn economic laws through experiment or real world observation. The only true economic laws are those based on first principles, namely, logic. You cannot predicted economic outcomes because none of the theories used by the austrian school can be used to predict anything. Your argument contradicts your position by using real world observation. If you accept really world observation you undermined the austrian school position and thus contradict yourself. You should be able to prove it to me without it.

    “The Keynesian acted experimentally and predicted certain economic outcomes. None of these outcomes appeared.

    Therefore, Austrian theory have been validated and Keynesian theory refuted.”

    Communists where joining the dots from about 2004-5 ish are they right to, they dont seem to agree with you about the way the ecomony works.

    Using your thinking, Therefore, Communists theory have been validated and Keynesian theory refuted. How can both Communist and Austrian theory both be validated by the same event and both totally incompatable with each other?

    “There is no assumption. There is only one axiom, as provided above.”

    Slippery slope argument, I have no need to accept any assuptions you care to make without good reasons for them.

    “You do not understand utopia. Go read St. Thomas More and then describe Utopia

    Second, you are using the Nirvana Fallacy – that is the demand of perfection.”

    The Nirvana fallacy is the logical error of comparing actual things with unrealistic, idealized alternatives. I am saying “YOU” are the one comparing unrealistic, idealized alternatives to actual things.

    “Since no human system can be absolutely perfect, your insistence of perfection is a fallacy.”

    I insistence no such thing and in no way could a rational person argue I am, you are using another straw man argument. It is an unrealistic, idealized alternative to say property rights can exist without force but yet you expect your system to have property rights without force! Yet you expect this to happen, YOU are being hopelessly unrealistic and this is a big contradiction in your argument. A market without force could not impose your right to own that land on a third party who was not a part of the agreement. The right for you to own that land could be 1) accept by all which is unlikely, 2) forced unpon those who do not agree to your land ownship. It is unrealistic to expect everyone to agree on everything, so your position for maximizing freedom by property right and no force, is utopian.

    utopian meaning
    adj.
    1. often Utopian Of, relating to, describing or having the characteristics of a Utopia: a Utopian island; Utopian novels.
    2.
    a. Excellent or ideal but impracticable; visionary: a utopian scheme for equalizing wealth.
    b. Proposing impracticably ideal schemes.
    n.
    A zealous but impractical reformer of human society.

    “Correct.

    Coercion distorts the free will of a man.

    Thus, if the premise is “a man acts with a purpose” it is perverted to “a man acts for a purpose of another man”.

    This perversion of the axiom of economics perverts economics.

    As I’ve posted before – if force is used in an economy, it can no longer be called “a free market economy” – it is now “something else other than a free market economy”

    “What is provided, however, is the optimum that can be achieved by the human mind.””

    Utopian.

    “That is not true.

    Austrians also point to the possibility of market failures due to natural events, such as floods, droughts, etc.

    It is true that baring natural disasters, the only other cause of market failure will be due to be coercive forces, like government.

    To a point, the only things that can cause a market failure is an event that impacts ALL the economy at the same time – natural disasters, and/or the violent force of government

    You can argue that government is a natural disaster – and I would be hard pressed to argue against you.”

    Note “To a point, the only things that can cause a market failure is an event that impacts ALL the economy at the same time – natural disasters, and/or the violent force of government” more importantly “the violent force of government”, which you agree is “force by the government in the form of taxation, regulation, and so forth.” And you say “if force is used in an economy, it can no longer be called “a free market economy””. So your ideal economy can only exist if there is no government force by your definition, given that this exists today as taxs etc, then the government stands in the way of the market working to your created ideal. So government when it acts cause market failures because it used force and should have left the market alone.

    “You do not understand the concept of perfect, and as a result, misapply the concept here.”

    Noone understands the concept of perfect, but you have said many times that the best system this perfect free market can exist without force and can only exist without force. Perfect in that it gives maximun freedom, this is unrealistic and impractical. It is utopian by the meaning of the word.

    “As already posted, there are other causes of market failure other than government violence.”

    I am sure there is but while government taxs (violence only by your definition) and regulation exist it will always be a cause of market failure.

    “That does not, however, dispel the causes of market failure due to government.”

    You contradict yourself, is your argument unsound?

    “They did for a short while and became the world’s most powerful economic force in history.”

    What is the great depression and was it unavoidable under free-market capitalism? Marxist view, capitalism tends to create unbalanced accumulations of wealth, leading to over-accumulations of capital which inevitably lead to a crisis. What does the austrian school say, o wait, expansion of the money supply and “government intervention” delayed the market’s adjustment and made the road to complete recovery more difficult. What is happening now?

    “No.

    No decentralized, disorganized force of violence can dominate an economy.

    Only a centralized, organized force of violence can dominate an economy.”

    This is an absurdity.

    “Criminals are marginalized by society
    – they are subdued, attacked, shunned, banned, killed or jailed – all actions that mitigate their damage.”

    So criminals are kept under control by violence by decentralized, disorganized individuals? What violence you say! Remember an organized society would have a police force and a government to oversee it. Remember this would be a centralized, organized force of violence that could dominate an economy, o no. They would have to tax to pay for it, o no.

    “”Government marginalizes society
    – it subdues free men, attacks non-violent men, etc – and as such directly and systemically distorts an economy.””

    We cannot have government!! Keep this sophistry to yourself. If you cannot see the contradiction in the reasoning its not my problem. So government violence is bad but individual violence is good, so long as its decentralized, disorganized force of violence that cannot dominate an economy; how could I not have seen it. lol what sophistry.

  10. Black Flag says:

    Charles

    Getting desperate are we?

    Your infantile tactics are not amusing.

    Cut/paste even if I was, does not undermined the arguement I am putting forward.

    You are not putting any arguments forward.

    You are taking other people’s points and pretending they are your own.

    You have to attack the arguement,

    You have made NO arguments – the cut and paste are not your words.

    Wrong.. you dont know what you are talking about. He said that there are things that you can prove, provability within a formal system but the truth of whcih cannot be proven within that system.

    You have serious understanding issues.

    You do not even understand what the word “wrong” means.

    Charles, you are incomprehensible and irrational.

    As such I see no further point in continuing discussions with you in this or any other matter.

  11. Charles says:

    The god debate,

    Statement made, “God does not exist”.

    Prove god does not exist? Burden of proof.
    Provability = Real evidence that god is absent. Logical contradictions in any definition given to god. The many different gods that cannot be proved.
    Now when you use Godel’s.
    Even given the shown provability that god is not real we cannot prove this because within our system we cannot prove “God does not exist” as true.

    Conclusion that the statement “God does not exist” is likely true but unprovable.

    This implies god does not exist but cannot prove it. This is true for dragons, pixies, and lots of other stuff that cannot be proved to exist. Evidence of provability must be shown under the formal system.

    So lets make the statement, “God could or does exist”.

    Prove it? Burden of proof.

    Provability = zero under system as there is no proof of the existence of god at all. You should logically be able prove the existence of something. Be this in a dream or not.
    How try to apply Godel’s.
    We cannot no provability. If god is there he/she/it should create some small evidence. There is none.
    Conclusion “God does exist” is unfounded. Statement god exists is false because statement cannot be proven true.

    Then maybe you say a god could exist somewhere, so maybe there could be a god. This could be true but this is unprovable. You would be saying here that in the very, very, very, unlikely special case that maybe somewhere in the big universe there is a god. This is true there could but this does not prove existence or justification for accepting existence.

    “Your infantile tactics are not amusing.”

    Not really you are just attack me personally.

    “You are not putting any arguments forward.”

    Yes I am, cut of paste or not aside, its still an argument but most of the time I am replying to your mostly ranting on about the evils of taxes etc.

    “You are taking other people’s points and pretending they are your own.”

    This is really desperate stuff. All the points we have covered here are other peoples they dont come from us. Nothing both of us have said is ours, its other peoples knowledge.

    “You have made NO arguments – the cut and paste are not your words.”

    Ad hominem. I can cut and paste if I like, this is not a exam test. This is a red herring and a straw man.

    “You do not even understand what the word “wrong” means.”

    You have tried redefine everything from accepted moral values up to meet your arguements needs. I posted with the meanings of the words cut and pasted from a dictionary because you kept voicing disagreement about meanings. Even so you still disgreed with them. 😮

    “Charles, you are incomprehensible and irrational.”

    I get it I don’t agree with you. This is the internet you can never win a debate here, I do not expect you to agree with me or do I expect anything constructive to happen. If you post your opinion, I will post mine.

    “As such I see no further point in continuing discussions with you in this or any other matter.”

    Remember I will always be on this site, I like and mostly agree with futile, I have the same rights to post replies to anyone as everyone else. If it helps you I don’t feel I won anything here. I just posted what I thought was right from what I mostly read.

  12. Dear Jamie.

    Nice blog you have here! Interesting article too – I have just written on the same topic on my blog: http://lukaszcx.wordpress.com/2010/12/02/a-crisis-of-american-capitalism/

    Economists don’t run around with magic-balls that can predict the future. No one can predict the future! It is not correct to say that the event leading up to the financial crisis went unnoticed. Many people, economists especially, were voicing their concerns, but their oppinions were not taken seriously before it was too late. Some foresaw the crisis but the reason why it is so difficult to forsee this things is that the environment is constantly changing and this is the first time in human history when the level of leverage was so high. Economic decisions are in the end made by people who largely choose on their perception of their situation and if that suddently change it becomes impossible to say what will happen in the future. Credit is built up on trust and if there is a feeling of safety we make certain decisions we dont make in situation of uncertainty or panic. Credit could therefore carelessly be handed out because people believed that prices would rise and that the financial market worked. When consumer confidence sharply dropped it created a completely new situation and changed the way we make decisions and our belief in the system.

    By the way I set up a link to your blog from my “links” page….

    take care and keep the articles coming….
    Lukasz

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: