First and foremost let me say, that to throw away the wealth of knowledge of the ages is such a travesty and arrogance of the first order I cannot comprehend the mindset one must be in to tell 500 years worth of Economic history and theory that they were all wrong, too stupid, all because you believe Economics is rooted in the minutia of math (Now, I'm not saying this as a personal attack on you, but your actual School of Thought)
.
I think this is more than a little extreme. I don’t believe I said anything to the effect of: “You economists in the past were stupid for believing the things you did”. I may be in the minority here, but I tend to think of Economics as the most “scientific” social science. Why? Because economists have access to much more reliable data than other social scientists. You CAN compare growth rates across countries, you CAN measure GDP per capita. Other social sciences have a more difficult time because they must ask questions that attempt to quantify things that can’t really be compared (A seven out of ten for “how happy are you” means different things to different people).
Thus, just like a science when new economic theories and models are introduced that better explain economic activity, I think it perfectly natural to replace the older, not-as-accurate models.
Finally, economics IS rooted in the minutia of math. Math is logic. If you want to create a logical argument, math is a necessary foundation.
When talking Economics you cannot use any model to correctly predict human behavior. It is impossible. IS-LM is a farce of the highest order
Is this an exaggeration? Many models correctly predict human behavior. Perhaps your problem is that economics is not a hard science? You think economic models should be able to say how each individual person will respond? That IS impossible. There is not enough data. What is perfectly reasonable, however, is to make predictions about aggregate populations. IS-LM is a basic model used to teach students about the simple aspects of monetary and fiscal policy.
I would really enjoy it if you could read this book and post your critique. I will let this book do my talking as it is one of the best Austrian demolitions of Keynesianism and the rest of the interventionist Schools of Thought (Monetarists et. al).
This is a long book. I will start reading it, but don’t expect anything immediate. I will only note now that the book is published in 1959, so the failure of the “new economies” it describes must be those before that year. That isn’t really “new” any more.
The point of the interest rate is to incentivize savings and to discourage loans (Who would take out a loan at 12% for instance?). Why do they do this? Because the banks do not have the funds to loan at 1, or 3, or 7% interest rates. Lower interest rates tells the market that there is more savings because there is more capital freed up. As a rule, resources are scarce. Interest rates are there to coordinate markets. They specifically tell entreprenuers when to invest in capital projects and when not to. Again, I don't want to get into the cycle again. but interest rates are paramount!
A bank would charge 12% instead of 3% or 7% because the demand for loans is higher. Think of the interest rate as the “price” of a loan. When many people want loans, the interest rate rises. When people don’t want loans, the interest rate falls. Thus, demand for loanable funds “tells” the market what the interest rate is, not the other way around.
After re-reading this section, I think you arrive at your conclusion because you are solely focused on the supply-side of loans. A lack of funds has rarely been the driving mechanism for changes in the interest rate.
Any artificial intervention in the interest rate is necessarily the largest market intervention because interest rates are the key to the whole market.
It almost sounds to me like you might be confusing the Federal Reserve’s interest rate setting with interest rates charged by private banks. The Federal Reserve only sets the discount rate, which is the interest rate charged to commercial banks on loans from the Federal Reserve. While the Fed’s rate indirectly influences the bank’s rates, it is not a one-for-one ratio. One needs to consider the demand curve as well.
Let me put it this way. You have in your hand 500 dollars. (...) He has gained enormous wealth by the mere fact he controls monetary policy and the printing press.
There are many problems with this. Who is the banker? The government? Are you suggesting that government investment results in the crowding-out of private investment? Is the government spending all of that money on investment or consumer goods? Or is it paying the wages of millions of employees?
And let us go one step further, since you believe that hyper-inflation is bad (It's correct definition being 50% or more annual inflation), what is the difference between 50% inflation and 12% inflation?
Menu costs. At 50% inflation, store owners are forced to change their prices every week to prevent their stores from losing money. At 12%, stores still “lose” money, but it is a MUCH smaller percentage. At 3%, it’s even smaller yet. Stores still change their prices regularly, but do so more often to adjust to changes in demand than to inflation. For example, a restaurant will rarely raise all prices at once, which one would expect if they were responding to inflation. Rather, they raise the prices on their most popular items.
The real problem with inflation is unexpected inflation (inflation rates that are different, whether more or less, than the expected rate). Unexpected inflation creates uncertainty in markets. When the inflation rate is constant, or varies little, as it does in the US, people input the inflation rate into their decision making process.
I also must ask how do you explain Stagflation? How do you explain 19th Century deflation correlating to the largest growth ever in Human history? How do you explain the 1921 recovery? How come Bernanke, Samuelson, and Krugman pointed to sound fundamentals in 2007 and how come your models could not account for human behavior even a few months before the crash? How come the Austrians did, and have done so in the past? How many times do you have to get it wrong, and Austrians get it right before you start to accept our theories?
I was under the impression that the current view of stagflation is that it occurred when the costs of production were increased by an external force (aka tax or government mandates). The stagflation in the 70’s is seen to result from Nixon’s wage and price controls of 1971.
19th century deflation is not a topic I have ever looked at. A quick search doesn’t point me to what you are talking about. Could you perhaps provide me a link or a specific event so I could look at it?
What would have been the response if Bernanke hadn’t said that? Consider that businesses and stock brokers used to make financial decisions based off of the color of Greenspan’s tie. If Bernanke had said “we’re screwed”, we would have been. Immediately. More so than we are now.
I will watch your movies as well when I have time. (Which will be later today or tomorrow)
Thanks for reading! As usual, I look forward to your thoughts.
Your fallacy is not understanding the Cantillon Effect. I have put the links in my post there for you, from both Cantillon and Mises.
Secondly, while you may not be overtly saying that everything that has come before is wrong, you surely are saying it between the lines. There are immutable logical laws in Economics which you fail to account for. For example, Say's Law. Economics is indeed a Science, but not a Science rooted in math. It is an axiomatic, logical Science. And the structure of math, yes, is logical, but the facts or distortions derived from math in Econometrics which is all statistics, cannot be a basis for a theory. You cannot explain an event using statistics. I think everyone knows the quip about statistics. In the general sense, statistics cannot tell you what caused the statistics, in that, you cannot derive for example, the subjective marginal utility of one person from another on a simple formula. Cardinal and Ordinal are mixed up in the world of Keynesians.
Anyways, I look forward to you reading that book and watching those videos. Likewise, after I finish Austrian Perspective to History of Economic Thought, I'll be chalking up my next reading assignment to a work from Samuelson.
I will quickly quip though, that you still do not understand the foundational basis for interest rates, and how they are calculated. The easiest thing to know about interest rates, is that it is both an incentivization tool, and a coordination tool for entreprenuers. It's the old saying of Time Preference. Interest rates are the single most important market phenomena, and likewise, instituting a homogenous rate through all localities, is absurd on its face. Interest rates reflect savings, and savings in differing localities will obviously be different. Interest rates should be acquired through it's natural process in the market. We call this the natural rate of interest. Only the market can produce the inter-temporal equilibrium to prevent such widespread booms and busts.
On January 29 2010 10:51 Yurebis wrote: Rothbardian you the man.
I think all of this stupid discussion could have been avoided if people weren't so indoctrinated to a statist paradigm where we got to rely on the elitists to tie our shoelaces, to give us food, make the grass grow, etc.
Capitalism, free market isn't a nasty monster that's going to come out from under your bed and eat you, damnit. Capitalism = free people working voluntarily. Anything other than capitalism has to be forced intervention. Be it a democratic government, a dictatorship, communism, whatever it is, if it's not voluntary, guess what, it's central planners telling you what you can or cannot do.
Shit guys, I got the perfect economy solution right here. I do whatever the fuck I want with my money, you do whatever you want with yours, and no one forces the other one to do anything, ok? Can we settle on that or do we have to be perpetually arguing over who has the better plan for everyone else?!? Fuck.
What if I want to use my money to buy a bomb to blow up your business so that my business next door is more profitable?
That would be punished via you paying for the damage you did to anothers property. Not only that, but people would be disinclined to shop at your business. Advocates of Market-Anarchy, or Laissez-Faire radicalism, advocate for this, in the general broadest sense:
This is under the assumption they have such knowledge. Most cases, we, as a population, do not have such knowledge. =/ Problem with Capitalism, we don't have perfect information.
Let us look at a scenario between a doctor and a patient. The patient needs a treatment, and while it may not necessarily be now, it must be sometime. The patient doesn't know how much a surgery will cost, it could cost $10, it could cost $1,000,000, they simply do not know. After all, how could they? Also, they do not necessarily know the quality of such a product. Could this doctor be a good surgeon, or does his patients usually suffer unusually long times of pain? You say the patient might know from the amount of customers, but how would they find out? Do they stand outside the door all day long? Either way, the opportunity cost of searching up such information could be higher than the gain from knowing it, and furthermore, such information might only be attainable under the loss of a substantial amount of money. So, how would the patient decide whether or not to get this surgery? They could move on, but do they know anymore? This lack of perfect information skews the results of the market, and gives much more than "equal" power between consumer and supplier.
The state doesn't have perfect information either... in fact they have a lesser incentive to, because the business to which they attend are not their own, but of others they may never meet or come face to face with.
May I propose that the question should be not "whether you can make the right choices?" but "who has the best incentives to make the right choices?" plus "right choices for who?"
No, the state doesn't, but it will usually have much better information than an individual. Incentives play no role in this as "right choices" are 1. Opinion based, unless you're talking of economically efficient being the right choice, but that completely disregards morality. 2. Relies upon the assumption there are choices available. 3. Relies upon that the option of a "right choice" is available. Which, often times, there isn't. Without perfect information, or at least even DECENT information, no right choice is forseeable.
Now, let us add a new number into my hypothesis above. Suppose the "right amount" or "equilibrium price" was $50,000. How could the patient EVER get to that price if each doctor charges him $500,000+ or nothing, and he doesn't have the information to offer $50,000? How can he argue against the doctors without sufficient medical knowledge?
Wait... who says what the equilibrium price is? IMO there is no equilibrium price (there is no spoon luls).. I think if you're really interested about the aspects of trade you should study uh catallactics.
The state has *no way* of knowing how much *you* value anything because that which you value can only be known after-the-fact, only after you buy something or perhaps even assert your wish to buy something for a certain cost do we know that you value the "something" more than the "cost" (in dollars if it may be)
A trade is made because both parties value the objects being traded differently! Can we agree on <--- that?
First and foremost let me say, that to throw away the wealth of knowledge of the ages is such a travesty and arrogance of the first order I cannot comprehend the mindset one must be in to tell 500 years worth of Economic history and theory that they were all wrong, too stupid, all because you believe Economics is rooted in the minutia of math (Now, I'm not saying this as a personal attack on you, but your actual School of Thought)
.
I think this is more than a little extreme. I don’t believe I said anything to the effect of: “You economists in the past were stupid for believing the things you did”. I may be in the minority here, but I tend to think of Economics as the most “scientific” social science. Why? Because economists have access to much more reliable data than other social scientists. You CAN compare growth rates across countries, you CAN measure GDP per capita. Other social sciences have a more difficult time because they must ask questions that attempt to quantify things that can’t really be compared (A seven out of ten for “how happy are you” means different things to different people).
Thus, just like a science when new economic theories and models are introduced that better explain economic activity, I think it perfectly natural to replace the older, not-as-accurate models.
Finally, economics IS rooted in the minutia of math. Math is logic. If you want to create a logical argument, math is a necessary foundation.
When talking Economics you cannot use any model to correctly predict human behavior. It is impossible. IS-LM is a farce of the highest order
Is this an exaggeration? Many models correctly predict human behavior. Perhaps your problem is that economics is not a hard science? You think economic models should be able to say how each individual person will respond? That IS impossible. There is not enough data. What is perfectly reasonable, however, is to make predictions about aggregate populations. IS-LM is a basic model used to teach students about the simple aspects of monetary and fiscal policy.
I would really enjoy it if you could read this book and post your critique. I will let this book do my talking as it is one of the best Austrian demolitions of Keynesianism and the rest of the interventionist Schools of Thought (Monetarists et. al).
This is a long book. I will start reading it, but don’t expect anything immediate. I will only note now that the book is published in 1959, so the failure of the “new economies” it describes must be those before that year. That isn’t really “new” any more.
let me hit on your interest rate fallacy.
What is my fallacy?
The point of the interest rate is to incentivize savings and to discourage loans (Who would take out a loan at 12% for instance?). Why do they do this? Because the banks do not have the funds to loan at 1, or 3, or 7% interest rates. Lower interest rates tells the market that there is more savings because there is more capital freed up. As a rule, resources are scarce. Interest rates are there to coordinate markets. They specifically tell entreprenuers when to invest in capital projects and when not to. Again, I don't want to get into the cycle again. but interest rates are paramount!
A bank would charge 12% instead of 3% or 7% because the demand for loans is higher. Think of the interest rate as the “price” of a loan. When many people want loans, the interest rate rises. When people don’t want loans, the interest rate falls. Thus, demand for loanable funds “tells” the market what the interest rate is, not the other way around.
After re-reading this section, I think you arrive at your conclusion because you are solely focused on the supply-side of loans. A lack of funds has rarely been the driving mechanism for changes in the interest rate.
Any artificial intervention in the interest rate is necessarily the largest market intervention because interest rates are the key to the whole market.
It almost sounds to me like you might be confusing the Federal Reserve’s interest rate setting with interest rates charged by private banks. The Federal Reserve only sets the discount rate, which is the interest rate charged to commercial banks on loans from the Federal Reserve. While the Fed’s rate indirectly influences the bank’s rates, it is not a one-for-one ratio. One needs to consider the demand curve as well.
Again I must point out your inflation fallacies.
Which fallacies?
Let me put it this way. You have in your hand 500 dollars. (...) He has gained enormous wealth by the mere fact he controls monetary policy and the printing press.
There are many problems with this. Who is the banker? The government? Are you suggesting that government investment results in the crowding-out of private investment? Is the government spending all of that money on investment or consumer goods? Or is it paying the wages of millions of employees?
And let us go one step further, since you believe that hyper-inflation is bad (It's correct definition being 50% or more annual inflation), what is the difference between 50% inflation and 12% inflation?
Menu costs. At 50% inflation, store owners are forced to change their prices every week to prevent their stores from losing money. At 12%, stores still “lose” money, but it is a MUCH smaller percentage. At 3%, it’s even smaller yet. Stores still change their prices regularly, but do so more often to adjust to changes in demand than to inflation. For example, a restaurant will rarely raise all prices at once, which one would expect if they were responding to inflation. Rather, they raise the prices on their most popular items.
The real problem with inflation is unexpected inflation (inflation rates that are different, whether more or less, than the expected rate). Unexpected inflation creates uncertainty in markets. When the inflation rate is constant, or varies little, as it does in the US, people input the inflation rate into their decision making process.
I also must ask how do you explain Stagflation? How do you explain 19th Century deflation correlating to the largest growth ever in Human history? How do you explain the 1921 recovery? How come Bernanke, Samuelson, and Krugman pointed to sound fundamentals in 2007 and how come your models could not account for human behavior even a few months before the crash? How come the Austrians did, and have done so in the past? How many times do you have to get it wrong, and Austrians get it right before you start to accept our theories?
I was under the impression that the current view of stagflation is that it occurred when the costs of production were increased by an external force (aka tax or government mandates). The stagflation in the 70’s is seen to result from Nixon’s wage and price controls of 1971.
19th century deflation is not a topic I have ever looked at. A quick search doesn’t point me to what you are talking about. Could you perhaps provide me a link or a specific event so I could look at it?
What would have been the response if Bernanke hadn’t said that? Consider that businesses and stock brokers used to make financial decisions based off of the color of Greenspan’s tie. If Bernanke had said “we’re screwed”, we would have been. Immediately. More so than we are now.
I will watch your movies as well when I have time. (Which will be later today or tomorrow)
Thanks for reading! As usual, I look forward to your thoughts.
Anyways, I look forward to you reading that book and watching those videos. Likewise, after I finish Austrian Perspective to History of Economic Thought, I'll be chalking up my next reading assignment to a work from Samuelson.
U so pimp rothbardian I wanna be like you when I grow up lolololo
On January 29 2010 12:05 lixlix wrote: Yurebis, you seem to advocate a type of anarchy that is very different from what Rothbardian is talking about.
Your commentary on child labor is some of the most silly and elitist things I've ever read.
"The poor would just consume it and then be left with nothing again. Can't you let the poor decide for themselves whats better for them, anyways?"
really? it seems you've already decided what the poor would choose.
wowowow hold on a second, I was talking about the type of government intervention one would prescribe to those less fortunated ones. Welfare doesn't help nobody. I have decided what they would choose? What have I decided for them?
On January 29 2010 10:51 Yurebis wrote: Rothbardian you the man.
I think all of this stupid discussion could have been avoided if people weren't so indoctrinated to a statist paradigm where we got to rely on the elitists to tie our shoelaces, to give us food, make the grass grow, etc.
Capitalism, free market isn't a nasty monster that's going to come out from under your bed and eat you, damnit. Capitalism = free people working voluntarily. Anything other than capitalism has to be forced intervention. Be it a democratic government, a dictatorship, communism, whatever it is, if it's not voluntary, guess what, it's central planners telling you what you can or cannot do.
Shit guys, I got the perfect economy solution right here. I do whatever the fuck I want with my money, you do whatever you want with yours, and no one forces the other one to do anything, ok? Can we settle on that or do we have to be perpetually arguing over who has the better plan for everyone else?!? Fuck.
What if I want to use my money to buy a bomb to blow up your business so that my business next door is more profitable?
That would be punished via you paying for the damage you did to anothers property. Not only that, but people would be disinclined to shop at your business. Advocates of Market-Anarchy, or Laissez-Faire radicalism, advocate for this, in the general broadest sense:
This is under the assumption they have such knowledge. Most cases, we, as a population, do not have such knowledge. =/ Problem with Capitalism, we don't have perfect information.
Let us look at a scenario between a doctor and a patient. The patient needs a treatment, and while it may not necessarily be now, it must be sometime. The patient doesn't know how much a surgery will cost, it could cost $10, it could cost $1,000,000, they simply do not know. After all, how could they? Also, they do not necessarily know the quality of such a product. Could this doctor be a good surgeon, or does his patients usually suffer unusually long times of pain? You say the patient might know from the amount of customers, but how would they find out? Do they stand outside the door all day long? Either way, the opportunity cost of searching up such information could be higher than the gain from knowing it, and furthermore, such information might only be attainable under the loss of a substantial amount of money. So, how would the patient decide whether or not to get this surgery? They could move on, but do they know anymore? This lack of perfect information skews the results of the market, and gives much more than "equal" power between consumer and supplier.
The state doesn't have perfect information either... in fact they have a lesser incentive to, because the business to which they attend are not their own, but of others they may never meet or come face to face with.
May I propose that the question should be not "whether you can make the right choices?" but "who has the best incentives to make the right choices?" plus "right choices for who?"
No, the state doesn't, but it will usually have much better information than an individual. Incentives play no role in this as "right choices" are 1. Opinion based, unless you're talking of economically efficient being the right choice, but that completely disregards morality. 2. Relies upon the assumption there are choices available. 3. Relies upon that the option of a "right choice" is available. Which, often times, there isn't. Without perfect information, or at least even DECENT information, no right choice is forseeable.
Now, let us add a new number into my hypothesis above. Suppose the "right amount" or "equilibrium price" was $50,000. How could the patient EVER get to that price if each doctor charges him $500,000+ or nothing, and he doesn't have the information to offer $50,000? How can he argue against the doctors without sufficient medical knowledge?
Wait... who says what the equilibrium price is? IMO there is no equilibrium price (there is no spoon luls).. I think if you're really interested about the aspects of trade you should study uh catallactics.
The state has *no way* of knowing how much *you* value anything because that which you value can only be known after-the-fact, only after you buy something or perhaps even assert your wish to buy something for a certain cost do we know that you value the "something" more than the "cost" (in dollars if it may be)
A trade is made because both parties value the objects being traded differently! Can we agree on <--- that?
Equilibrium price is the price determined by the market given a supply and demand schedule which is the aggregate of people's personal demands and the suppliers personal well, supplies. But fair enough if you do not believe in an equilibrium price. And no, the state really doesn't. That's a problem with it, and the problem with the market is lack of perfect information. Thus, we can't really say one is the best, only that in certain circumstances, one is preferred over another. =/ Yes, I agree with that assumption. Sorry if I'm frustrating you.
First and foremost let me say, that to throw away the wealth of knowledge of the ages is such a travesty and arrogance of the first order I cannot comprehend the mindset one must be in to tell 500 years worth of Economic history and theory that they were all wrong, too stupid, all because you believe Economics is rooted in the minutia of math (Now, I'm not saying this as a personal attack on you, but your actual School of Thought)
.
I think this is more than a little extreme. I don’t believe I said anything to the effect of: “You economists in the past were stupid for believing the things you did”. I may be in the minority here, but I tend to think of Economics as the most “scientific” social science. Why? Because economists have access to much more reliable data than other social scientists. You CAN compare growth rates across countries, you CAN measure GDP per capita. Other social sciences have a more difficult time because they must ask questions that attempt to quantify things that can’t really be compared (A seven out of ten for “how happy are you” means different things to different people).
Thus, just like a science when new economic theories and models are introduced that better explain economic activity, I think it perfectly natural to replace the older, not-as-accurate models.
Finally, economics IS rooted in the minutia of math. Math is logic. If you want to create a logical argument, math is a necessary foundation.
When talking Economics you cannot use any model to correctly predict human behavior. It is impossible. IS-LM is a farce of the highest order
Is this an exaggeration? Many models correctly predict human behavior. Perhaps your problem is that economics is not a hard science? You think economic models should be able to say how each individual person will respond? That IS impossible. There is not enough data. What is perfectly reasonable, however, is to make predictions about aggregate populations. IS-LM is a basic model used to teach students about the simple aspects of monetary and fiscal policy.
I would really enjoy it if you could read this book and post your critique. I will let this book do my talking as it is one of the best Austrian demolitions of Keynesianism and the rest of the interventionist Schools of Thought (Monetarists et. al).
This is a long book. I will start reading it, but don’t expect anything immediate. I will only note now that the book is published in 1959, so the failure of the “new economies” it describes must be those before that year. That isn’t really “new” any more.
let me hit on your interest rate fallacy.
What is my fallacy?
The point of the interest rate is to incentivize savings and to discourage loans (Who would take out a loan at 12% for instance?). Why do they do this? Because the banks do not have the funds to loan at 1, or 3, or 7% interest rates. Lower interest rates tells the market that there is more savings because there is more capital freed up. As a rule, resources are scarce. Interest rates are there to coordinate markets. They specifically tell entreprenuers when to invest in capital projects and when not to. Again, I don't want to get into the cycle again. but interest rates are paramount!
A bank would charge 12% instead of 3% or 7% because the demand for loans is higher. Think of the interest rate as the “price” of a loan. When many people want loans, the interest rate rises. When people don’t want loans, the interest rate falls. Thus, demand for loanable funds “tells” the market what the interest rate is, not the other way around.
After re-reading this section, I think you arrive at your conclusion because you are solely focused on the supply-side of loans. A lack of funds has rarely been the driving mechanism for changes in the interest rate.
Any artificial intervention in the interest rate is necessarily the largest market intervention because interest rates are the key to the whole market.
It almost sounds to me like you might be confusing the Federal Reserve’s interest rate setting with interest rates charged by private banks. The Federal Reserve only sets the discount rate, which is the interest rate charged to commercial banks on loans from the Federal Reserve. While the Fed’s rate indirectly influences the bank’s rates, it is not a one-for-one ratio. One needs to consider the demand curve as well.
Again I must point out your inflation fallacies.
Which fallacies?
Let me put it this way. You have in your hand 500 dollars. (...) He has gained enormous wealth by the mere fact he controls monetary policy and the printing press.
There are many problems with this. Who is the banker? The government? Are you suggesting that government investment results in the crowding-out of private investment? Is the government spending all of that money on investment or consumer goods? Or is it paying the wages of millions of employees?
And let us go one step further, since you believe that hyper-inflation is bad (It's correct definition being 50% or more annual inflation), what is the difference between 50% inflation and 12% inflation?
Menu costs. At 50% inflation, store owners are forced to change their prices every week to prevent their stores from losing money. At 12%, stores still “lose” money, but it is a MUCH smaller percentage. At 3%, it’s even smaller yet. Stores still change their prices regularly, but do so more often to adjust to changes in demand than to inflation. For example, a restaurant will rarely raise all prices at once, which one would expect if they were responding to inflation. Rather, they raise the prices on their most popular items.
The real problem with inflation is unexpected inflation (inflation rates that are different, whether more or less, than the expected rate). Unexpected inflation creates uncertainty in markets. When the inflation rate is constant, or varies little, as it does in the US, people input the inflation rate into their decision making process.
I also must ask how do you explain Stagflation? How do you explain 19th Century deflation correlating to the largest growth ever in Human history? How do you explain the 1921 recovery? How come Bernanke, Samuelson, and Krugman pointed to sound fundamentals in 2007 and how come your models could not account for human behavior even a few months before the crash? How come the Austrians did, and have done so in the past? How many times do you have to get it wrong, and Austrians get it right before you start to accept our theories?
I was under the impression that the current view of stagflation is that it occurred when the costs of production were increased by an external force (aka tax or government mandates). The stagflation in the 70’s is seen to result from Nixon’s wage and price controls of 1971.
19th century deflation is not a topic I have ever looked at. A quick search doesn’t point me to what you are talking about. Could you perhaps provide me a link or a specific event so I could look at it?
What would have been the response if Bernanke hadn’t said that? Consider that businesses and stock brokers used to make financial decisions based off of the color of Greenspan’s tie. If Bernanke had said “we’re screwed”, we would have been. Immediately. More so than we are now.
I will watch your movies as well when I have time. (Which will be later today or tomorrow)
Thanks for reading! As usual, I look forward to your thoughts.
Anyways, I look forward to you reading that book and watching those videos. Likewise, after I finish Austrian Perspective to History of Economic Thought, I'll be chalking up my next reading assignment to a work from Samuelson.
U so pimp rothbardian I wanna be like you when I grow up lolololo
Haha Yurebis. Do not flatter. You are doing very well yourself.
Rothbardian, why do you mention Say's law? I mean, I understand that it was an economic law of the past, but do you currently believe that it still holds? Personally, I do not, but I would like to hear your opinion.
On January 29 2010 10:51 Yurebis wrote: Rothbardian you the man.
I think all of this stupid discussion could have been avoided if people weren't so indoctrinated to a statist paradigm where we got to rely on the elitists to tie our shoelaces, to give us food, make the grass grow, etc.
Capitalism, free market isn't a nasty monster that's going to come out from under your bed and eat you, damnit. Capitalism = free people working voluntarily. Anything other than capitalism has to be forced intervention. Be it a democratic government, a dictatorship, communism, whatever it is, if it's not voluntary, guess what, it's central planners telling you what you can or cannot do.
Shit guys, I got the perfect economy solution right here. I do whatever the fuck I want with my money, you do whatever you want with yours, and no one forces the other one to do anything, ok? Can we settle on that or do we have to be perpetually arguing over who has the better plan for everyone else?!? Fuck.
What if I want to use my money to buy a bomb to blow up your business so that my business next door is more profitable?
That would be punished via you paying for the damage you did to anothers property. Not only that, but people would be disinclined to shop at your business. Advocates of Market-Anarchy, or Laissez-Faire radicalism, advocate for this, in the general broadest sense:
This is under the assumption they have such knowledge. Most cases, we, as a population, do not have such knowledge. =/ Problem with Capitalism, we don't have perfect information.
Let us look at a scenario between a doctor and a patient. The patient needs a treatment, and while it may not necessarily be now, it must be sometime. The patient doesn't know how much a surgery will cost, it could cost $10, it could cost $1,000,000, they simply do not know. After all, how could they? Also, they do not necessarily know the quality of such a product. Could this doctor be a good surgeon, or does his patients usually suffer unusually long times of pain? You say the patient might know from the amount of customers, but how would they find out? Do they stand outside the door all day long? Either way, the opportunity cost of searching up such information could be higher than the gain from knowing it, and furthermore, such information might only be attainable under the loss of a substantial amount of money. So, how would the patient decide whether or not to get this surgery? They could move on, but do they know anymore? This lack of perfect information skews the results of the market, and gives much more than "equal" power between consumer and supplier.
The state doesn't have perfect information either... in fact they have a lesser incentive to, because the business to which they attend are not their own, but of others they may never meet or come face to face with.
May I propose that the question should be not "whether you can make the right choices?" but "who has the best incentives to make the right choices?" plus "right choices for who?"
No, the state doesn't, but it will usually have much better information than an individual. Incentives play no role in this as "right choices" are 1. Opinion based, unless you're talking of economically efficient being the right choice, but that completely disregards morality. 2. Relies upon the assumption there are choices available. 3. Relies upon that the option of a "right choice" is available. Which, often times, there isn't. Without perfect information, or at least even DECENT information, no right choice is forseeable.
Now, let us add a new number into my hypothesis above. Suppose the "right amount" or "equilibrium price" was $50,000. How could the patient EVER get to that price if each doctor charges him $500,000+ or nothing, and he doesn't have the information to offer $50,000? How can he argue against the doctors without sufficient medical knowledge?
Wait... who says what the equilibrium price is? IMO there is no equilibrium price (there is no spoon luls).. I think if you're really interested about the aspects of trade you should study uh catallactics.
The state has *no way* of knowing how much *you* value anything because that which you value can only be known after-the-fact, only after you buy something or perhaps even assert your wish to buy something for a certain cost do we know that you value the "something" more than the "cost" (in dollars if it may be)
A trade is made because both parties value the objects being traded differently! Can we agree on <--- that?
Equilibrium price is the price determined by the market given a supply and demand schedule which is the aggregate of people's personal demands and the suppliers personal well, supplies. But fair enough if you do not believe in an equilibrium price. And no, the state really doesn't. That's a problem with it, and the problem with the market is lack of perfect information. Thus, we can't really say one is the best, only that in certain circumstances, one is preferred over another. =/ Yes, I agree with that assumption. Sorry if I'm frustrating you.
Naw it's not frustrating, I like teaching and being taught, that's what we be doing here I hope. Maybe I was too harsh on saying that an equilibrium price doesn't exist. Well it certainly doesn't exist somewhere in reality, like.. objectively. But an equilibrium price would be only an approximation to that which you find other peoples evaluations to be at. Like.. there's no exact price, it's only approximations.. because even at the lowest common denominator, the individual, their values are also constantly changing... so.. there certainly can't be an exact price even if we were all to have our heads scanned and analyzed by some really good keynesian.
I don't see lack of perfect information as a "problem with the market" .. well, it's as much of a problem as "people can't fly" or "move through walls" if you know what I mean.
ZeroJumps, while there is a lot of data in Economics, it is data of the past. Its when economists use the data to fit the theory instead of the theory to fit the data that Economics becomes dangerous. Humans are by nature trained to find patterns even when no patterns exist.
Economics is arguably the most destructive of social sciences.
On January 29 2010 12:11 lixlix wrote: do you not even understand what you yourself write?
sentence one " the poor would just consume it (it referring to aid/handouts) and then be left with nothing again. "
this implies that since they will be left with nothing again, they should not be given aid.
Which is in direct contradiction to your 2nd sentence criticism of "Can't you let the poor decide for themselves whats better for them, anyways?"
Nuh-uh, there's a big difference to what I expect to happen somewhere somewhen given a set of circumstances and what I think they ought to do. I'm saying, if what you want is prosperity to all, stealing from the rich and giving it to the poor is a poor way to making anything sustainable! Alright? I'm sorry if I wasn't clear enough.
What I ought they should do however would be... not to beg their representatives to steal from the rich. I think people ought not to steal. That's as far as prescriptive declarations you'll get from me.
Edit: and by representatives I mean, the state mafia at large.
On January 29 2010 10:51 Yurebis wrote: Rothbardian you the man.
I think all of this stupid discussion could have been avoided if people weren't so indoctrinated to a statist paradigm where we got to rely on the elitists to tie our shoelaces, to give us food, make the grass grow, etc.
Capitalism, free market isn't a nasty monster that's going to come out from under your bed and eat you, damnit. Capitalism = free people working voluntarily. Anything other than capitalism has to be forced intervention. Be it a democratic government, a dictatorship, communism, whatever it is, if it's not voluntary, guess what, it's central planners telling you what you can or cannot do.
Shit guys, I got the perfect economy solution right here. I do whatever the fuck I want with my money, you do whatever you want with yours, and no one forces the other one to do anything, ok? Can we settle on that or do we have to be perpetually arguing over who has the better plan for everyone else?!? Fuck.
What if I want to use my money to buy a bomb to blow up your business so that my business next door is more profitable?
That would be punished via you paying for the damage you did to anothers property. Not only that, but people would be disinclined to shop at your business. Advocates of Market-Anarchy, or Laissez-Faire radicalism, advocate for this, in the general broadest sense:
Of liberty I would say that, in the whole plenitude of its extent, it is unobstructed action according to our will. But rightful liberty is unobstructed action according to our will within limits drawn around us by the equal rights of others. I do not add “within the limits of the law,” because law is often but the tyrant’s will, and always so when it violates the right of an individual. -- Thomas Jefferson
Here again though I find it funny you accuse me of a straw-man when I ask you who had a higher standard of living, the pre or post industrial average man when that is a legitimate Economic question, to you, coming in and denouncing Free-Market voluntaryism on the basis of violation of anothers liberty which is in every case inherently criminal. If that isn't a straw-man I don't know what is. It also belies your bias in the fact you believe that the State produces an egalitarian man, or in the very least can influence a person's behavior. If this was so, merely producing a law proclaiming x activity to be illegal would reduce such activity, but in every case it doesn't. Hence, why Prohibition never worked. You buy into the fallacy of Thomas Hobbes. He has scared you to believe that men are inherently evil, and destructive. This is the biggest load of horse patooty I have ever read. If that was the case then all such Voluntary societies would destroy themselves, yet, even before Hobbes there were Voluntary societies that were peaceful and lasted for hundreds of years. Case in point -- Celtic Ireland, Medieval Iceland (around 1000 to 1300), Colonial Pennsylvania, and in the later years to a very large extent the Old West.
The natural state of man, is peaceful voluntary cooperation. We arrive at such conclusions due to the nature of reason. A man is better off in every sense by peaceful voluntary cooperation rather than violent appropriation in a free society. Is not the inherent predicament of man to be self-interested, and of this highest order of self-interest is preservation of life? We see this borne out in Switzerland who have the least restrictive gun laws of any society, and yet the lowest crime rates. If your hypothesis was correct, and that of Hobbes, the mere presence and ease of acquisition would lead to more crime, more death, and more destruction, yet, the exact opposite is true. How do you account for this discrepancy?
Actually, I'm Chinese and you should call me a Legalist if anything. I'm not even from the same realm of philosophical thought as you. I don't read Hobbes. What I do read is enough history to know that Celtic Ireland was far from nonviolent.
I'm not scared by a guy I've never read. Rather, I've been outside the house enough to see that a law won't prevent x activity unless there's a cop and a jail waiting for the guy who breaks it. The natural state of man is not peaceful voluntary cooperation, hence why man developed laws in the first place. You take an amazing number of leaps in logic to come to your conclusions. Sure is nice to know that you've definitively nailed down the nature of man though.
I find it odd that all these theories rely on vast assumptions about the nature of man. You ever entertained the notion that the nature of man might be debatable? I notice people do this several times in the course of economics. Man is inherently selfish. Man is inherently rational. Man is inherently peaceful and cooperative. Where are all these men you keep hiding? I don't see them in my world. I see a lot of decent, yet flawed, and quite often bone-headed people with a laundry list of insecurities and foibles that lead them to make all kinds of decisions that are not perfectly rational nor inherently selfish.
Again, all I've seen are theories that seem very detached from the reality that's out there. I guess violence is just a byproduct of laws. Without laws, nobody would be violent.
On January 29 2010 12:11 lixlix wrote: do you not even understand what you yourself write?
sentence one " the poor would just consume it (it referring to aid/handouts) and then be left with nothing again. "
this implies that since they will be left with nothing again, they should not be given aid.
Which is in direct contradiction to your 2nd sentence criticism of "Can't you let the poor decide for themselves whats better for them, anyways?"
There is no contradiction. How does one get something given to them? It is either voluntarily through charity, or through the violent appropriation by State agitators. In the latter sense, since our institution of a Republic has limited Democratic principles, it can be said, and as Tocqueville wrote -- Those who realize they can plunder the public trust, will bring ruin upon themselves (I have nonetheless paraphrased and put it into my own words). In essence what is meant is that people will vote to steal from the minority. Once a majority realizes it can vote to forecfully steal from the minority (Welfare) society is doomed to fail, and those who steal have no incentive themselves to produce anything. They are parasites. Leeches.
It is also the old saying about teaching a Man to fish and giving him a fish. What is more moral? Dependancy or independance? What is the only economically sustainable method? Not only do handouts destroy capital and productivity it fosters a naive State-Paternalism which incentivizes sloth and laziness.
It was Benjamin Franklin who said:
"I am for doing good to the poor, but...I think the best way of doing good to the poor, is not making them easy in poverty, but leading or driving them out of it. I observed...that the more public provisions were made for the poor, the less they provided for themselves, and of course became poorer. And, on the contrary, the less was done for them, the more they did for themselves, and became richer."
I love it when people bash capitalism and seem to not be able to fathom how amazingly high the standard of living has increased across the world. Poor people still exist, but more people have a higher standard of living than could be dreamed of 100 years ago.
Being against economic individualism (capitalism is a derogatory name coined by Marx) is not a new idea, nor has it ever been a practical one that made for good policy.
"The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design." - F.A. Hayek The Fatal Conceit
On January 29 2010 10:51 Yurebis wrote: Rothbardian you the man.
I think all of this stupid discussion could have been avoided if people weren't so indoctrinated to a statist paradigm where we got to rely on the elitists to tie our shoelaces, to give us food, make the grass grow, etc.
Capitalism, free market isn't a nasty monster that's going to come out from under your bed and eat you, damnit. Capitalism = free people working voluntarily. Anything other than capitalism has to be forced intervention. Be it a democratic government, a dictatorship, communism, whatever it is, if it's not voluntary, guess what, it's central planners telling you what you can or cannot do.
Shit guys, I got the perfect economy solution right here. I do whatever the fuck I want with my money, you do whatever you want with yours, and no one forces the other one to do anything, ok? Can we settle on that or do we have to be perpetually arguing over who has the better plan for everyone else?!? Fuck.
What if I want to use my money to buy a bomb to blow up your business so that my business next door is more profitable?
That would be punished via you paying for the damage you did to anothers property. Not only that, but people would be disinclined to shop at your business. Advocates of Market-Anarchy, or Laissez-Faire radicalism, advocate for this, in the general broadest sense:
This is under the assumption they have such knowledge. Most cases, we, as a population, do not have such knowledge. =/ Problem with Capitalism, we don't have perfect information.
Let us look at a scenario between a doctor and a patient. The patient needs a treatment, and while it may not necessarily be now, it must be sometime. The patient doesn't know how much a surgery will cost, it could cost $10, it could cost $1,000,000, they simply do not know. After all, how could they? Also, they do not necessarily know the quality of such a product. Could this doctor be a good surgeon, or does his patients usually suffer unusually long times of pain? You say the patient might know from the amount of customers, but how would they find out? Do they stand outside the door all day long? Either way, the opportunity cost of searching up such information could be higher than the gain from knowing it, and furthermore, such information might only be attainable under the loss of a substantial amount of money. So, how would the patient decide whether or not to get this surgery? They could move on, but do they know anymore? This lack of perfect information skews the results of the market, and gives much more than "equal" power between consumer and supplier.
The state doesn't have perfect information either... in fact they have a lesser incentive to, because the business to which they attend are not their own, but of others they may never meet or come face to face with.
May I propose that the question should be not "whether you can make the right choices?" but "who has the best incentives to make the right choices?" plus "right choices for who?"
No, the state doesn't, but it will usually have much better information than an individual. Incentives play no role in this as "right choices" are 1. Opinion based, unless you're talking of economically efficient being the right choice, but that completely disregards morality. 2. Relies upon the assumption there are choices available. 3. Relies upon that the option of a "right choice" is available. Which, often times, there isn't. Without perfect information, or at least even DECENT information, no right choice is forseeable.
Now, let us add a new number into my hypothesis above. Suppose the "right amount" or "equilibrium price" was $50,000. How could the patient EVER get to that price if each doctor charges him $500,000+ or nothing, and he doesn't have the information to offer $50,000? How can he argue against the doctors without sufficient medical knowledge?
Wait... who says what the equilibrium price is? IMO there is no equilibrium price (there is no spoon luls).. I think if you're really interested about the aspects of trade you should study uh catallactics.
The state has *no way* of knowing how much *you* value anything because that which you value can only be known after-the-fact, only after you buy something or perhaps even assert your wish to buy something for a certain cost do we know that you value the "something" more than the "cost" (in dollars if it may be)
A trade is made because both parties value the objects being traded differently! Can we agree on <--- that?
Equilibrium price is the price determined by the market given a supply and demand schedule which is the aggregate of people's personal demands and the suppliers personal well, supplies. But fair enough if you do not believe in an equilibrium price. And no, the state really doesn't. That's a problem with it, and the problem with the market is lack of perfect information. Thus, we can't really say one is the best, only that in certain circumstances, one is preferred over another. =/ Yes, I agree with that assumption. Sorry if I'm frustrating you.
Naw it's not frustrating, I like teaching and being taught, that's what we be doing here I hope. Maybe I was too harsh on saying that an equilibrium price doesn't exist. Well it certainly doesn't exist somewhere in reality, like.. objectively. But an equilibrium price would be only an approximation to that which you find other peoples evaluations to be at. Like.. there's no exact price, it's only approximations.. because even at the lowest common denominator, the individual, their values are also constantly changing... so.. there certainly can't be an exact price even if we were all to have our heads scanned and analyzed by some really good keynesian.
I don't see lack of perfect information as a "problem with the market" .. well, it's as much of a problem as "people can't fly" or "move through walls" if you know what I mean.
Haha, that's very true. It is very interesting to learn through conversation and civil debate. ^_^ That point, I agree on. An equilibrium price, as far as I'm concerned, is an ideal. Much like infinity,you can get the idea, but to reach it is incredibly difficult. Nonetheless, to have the idea there as an indicator is still useful, much like how the concept of infinity is useful in mathematics.
Hmm, well, I highly disagree on that point. =/ See, the market works because there is a struggle between two forces, both of which are trying to do the best for their own good, to make a mutually beneficial choice. I think of it much like a court room, where two sides battle it out to find the truth of the matter. However, if one side suddenly doesn't have a crucial witness, or piece of information, the system falls apart. =(
There is always an equilibrium price but this equilibrium price is constantly shifting and often extremely difficult to know. The market price can be extremely far away from the equilibrium price for a very long time due to inefficiencies, information lag, etc...
On January 29 2010 10:51 Yurebis wrote: Rothbardian you the man.
I think all of this stupid discussion could have been avoided if people weren't so indoctrinated to a statist paradigm where we got to rely on the elitists to tie our shoelaces, to give us food, make the grass grow, etc.
Capitalism, free market isn't a nasty monster that's going to come out from under your bed and eat you, damnit. Capitalism = free people working voluntarily. Anything other than capitalism has to be forced intervention. Be it a democratic government, a dictatorship, communism, whatever it is, if it's not voluntary, guess what, it's central planners telling you what you can or cannot do.
Shit guys, I got the perfect economy solution right here. I do whatever the fuck I want with my money, you do whatever you want with yours, and no one forces the other one to do anything, ok? Can we settle on that or do we have to be perpetually arguing over who has the better plan for everyone else?!? Fuck.
What if I want to use my money to buy a bomb to blow up your business so that my business next door is more profitable?
That would be punished via you paying for the damage you did to anothers property. Not only that, but people would be disinclined to shop at your business. Advocates of Market-Anarchy, or Laissez-Faire radicalism, advocate for this, in the general broadest sense:
Of liberty I would say that, in the whole plenitude of its extent, it is unobstructed action according to our will. But rightful liberty is unobstructed action according to our will within limits drawn around us by the equal rights of others. I do not add “within the limits of the law,” because law is often but the tyrant’s will, and always so when it violates the right of an individual. -- Thomas Jefferson
Here again though I find it funny you accuse me of a straw-man when I ask you who had a higher standard of living, the pre or post industrial average man when that is a legitimate Economic question, to you, coming in and denouncing Free-Market voluntaryism on the basis of violation of anothers liberty which is in every case inherently criminal. If that isn't a straw-man I don't know what is. It also belies your bias in the fact you believe that the State produces an egalitarian man, or in the very least can influence a person's behavior. If this was so, merely producing a law proclaiming x activity to be illegal would reduce such activity, but in every case it doesn't. Hence, why Prohibition never worked. You buy into the fallacy of Thomas Hobbes. He has scared you to believe that men are inherently evil, and destructive. This is the biggest load of horse patooty I have ever read. If that was the case then all such Voluntary societies would destroy themselves, yet, even before Hobbes there were Voluntary societies that were peaceful and lasted for hundreds of years. Case in point -- Celtic Ireland, Medieval Iceland (around 1000 to 1300), Colonial Pennsylvania, and in the later years to a very large extent the Old West.
The natural state of man, is peaceful voluntary cooperation. We arrive at such conclusions due to the nature of reason. A man is better off in every sense by peaceful voluntary cooperation rather than violent appropriation in a free society. Is not the inherent predicament of man to be self-interested, and of this highest order of self-interest is preservation of life? We see this borne out in Switzerland who have the least restrictive gun laws of any society, and yet the lowest crime rates. If your hypothesis was correct, and that of Hobbes, the mere presence and ease of acquisition would lead to more crime, more death, and more destruction, yet, the exact opposite is true. How do you account for this discrepancy?
Actually, I'm Chinese and you should call me a Legalist if anything. I'm not even from the same realm of philosophical thought as you. I don't read Hobbes. What I do read is enough history to know that Celtic Ireland was far from nonviolent.
I'm not scared by a guy I've never read. Rather, I've been outside the house enough to see that a law won't prevent x activity unless there's a cop and a jail waiting for the guy who breaks it. The natural state of man is not peaceful voluntary cooperation, hence why man developed laws in the first place. You take an amazing number of leaps in logic to come to your conclusions. Sure is nice to know that you've definitively nailed down the nature of man though.
I find it odd that all these theories rely on vast assumptions about the nature of man. You ever entertained the notion that the nature of man might be debatable? I notice people do this several times in the course of economics. Man is inherently selfish. Man is inherently rational. Man is inherently peaceful and cooperative. Where are all these men you keep hiding? I don't see them in my world. I see a lot of decent, yet flawed, and quite often bone-headed people with a laundry list of insecurities and foibles that lead them to make all kinds of decisions that are not perfectly rational nor inherently selfish.
Again, all I've seen are theories that seem very detached from the reality that's out there. I guess violence is just a byproduct of laws. Without laws, nobody would be violent.
We call that Moral Hazard and that is a product of the State. Secondly, there will always be crime, for the sole reason that humans have free will. We recognize this fact, and have property rights written down and codified so as to create a common link and understanding in society. No where did I say Celtic Ireland was non-violent, or that crime would disappear. On the contrary. Celtic Ireland was as advanced a society as any other Western Nation-State, yet, they were wholly voluntary and Stateless. Your theory cannot account for this. For if it could, it would contradict your beliefs, yet you still hold fast that a monopoly must be for the safety and security of society.
Apparently, you have skipped over the history of Tuath's and Land Associations. They were private law societies.
On January 29 2010 12:20 0neder wrote: I love it when people bash capitalism and seem to not be able to fathom how amazingly high the standard of living has increased across the world. Poor people still exist, but more people have a higher standard of living than could be dreamed of 100 years ago.
Being against economic individualism (capitalism is a derogatory name coined by Marx) is not a new idea, nor has it ever been a practical one that made for good policy.
"The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design." - F.A. Hayek The Fatal Conceit
I love it when people don't read the thread then want to quote basic one-liners about how great capitalism is. The world needs all types though. Cheers!
On January 29 2010 10:51 Yurebis wrote: Rothbardian you the man.
I think all of this stupid discussion could have been avoided if people weren't so indoctrinated to a statist paradigm where we got to rely on the elitists to tie our shoelaces, to give us food, make the grass grow, etc.
Capitalism, free market isn't a nasty monster that's going to come out from under your bed and eat you, damnit. Capitalism = free people working voluntarily. Anything other than capitalism has to be forced intervention. Be it a democratic government, a dictatorship, communism, whatever it is, if it's not voluntary, guess what, it's central planners telling you what you can or cannot do.
Shit guys, I got the perfect economy solution right here. I do whatever the fuck I want with my money, you do whatever you want with yours, and no one forces the other one to do anything, ok? Can we settle on that or do we have to be perpetually arguing over who has the better plan for everyone else?!? Fuck.
What if I want to use my money to buy a bomb to blow up your business so that my business next door is more profitable?
That would be punished via you paying for the damage you did to anothers property. Not only that, but people would be disinclined to shop at your business. Advocates of Market-Anarchy, or Laissez-Faire radicalism, advocate for this, in the general broadest sense:
This is under the assumption they have such knowledge. Most cases, we, as a population, do not have such knowledge. =/ Problem with Capitalism, we don't have perfect information.
Let us look at a scenario between a doctor and a patient. The patient needs a treatment, and while it may not necessarily be now, it must be sometime. The patient doesn't know how much a surgery will cost, it could cost $10, it could cost $1,000,000, they simply do not know. After all, how could they? Also, they do not necessarily know the quality of such a product. Could this doctor be a good surgeon, or does his patients usually suffer unusually long times of pain? You say the patient might know from the amount of customers, but how would they find out? Do they stand outside the door all day long? Either way, the opportunity cost of searching up such information could be higher than the gain from knowing it, and furthermore, such information might only be attainable under the loss of a substantial amount of money. So, how would the patient decide whether or not to get this surgery? They could move on, but do they know anymore? This lack of perfect information skews the results of the market, and gives much more than "equal" power between consumer and supplier.
The state doesn't have perfect information either... in fact they have a lesser incentive to, because the business to which they attend are not their own, but of others they may never meet or come face to face with.
May I propose that the question should be not "whether you can make the right choices?" but "who has the best incentives to make the right choices?" plus "right choices for who?"
No, the state doesn't, but it will usually have much better information than an individual. Incentives play no role in this as "right choices" are 1. Opinion based, unless you're talking of economically efficient being the right choice, but that completely disregards morality. 2. Relies upon the assumption there are choices available. 3. Relies upon that the option of a "right choice" is available. Which, often times, there isn't. Without perfect information, or at least even DECENT information, no right choice is forseeable.
Now, let us add a new number into my hypothesis above. Suppose the "right amount" or "equilibrium price" was $50,000. How could the patient EVER get to that price if each doctor charges him $500,000+ or nothing, and he doesn't have the information to offer $50,000? How can he argue against the doctors without sufficient medical knowledge?
Wait... who says what the equilibrium price is? IMO there is no equilibrium price (there is no spoon luls).. I think if you're really interested about the aspects of trade you should study uh catallactics.
The state has *no way* of knowing how much *you* value anything because that which you value can only be known after-the-fact, only after you buy something or perhaps even assert your wish to buy something for a certain cost do we know that you value the "something" more than the "cost" (in dollars if it may be)
A trade is made because both parties value the objects being traded differently! Can we agree on <--- that?
Equilibrium price is the price determined by the market given a supply and demand schedule which is the aggregate of people's personal demands and the suppliers personal well, supplies. But fair enough if you do not believe in an equilibrium price. And no, the state really doesn't. That's a problem with it, and the problem with the market is lack of perfect information. Thus, we can't really say one is the best, only that in certain circumstances, one is preferred over another. =/ Yes, I agree with that assumption. Sorry if I'm frustrating you.
Naw it's not frustrating, I like teaching and being taught, that's what we be doing here I hope. Maybe I was too harsh on saying that an equilibrium price doesn't exist. Well it certainly doesn't exist somewhere in reality, like.. objectively. But an equilibrium price would be only an approximation to that which you find other peoples evaluations to be at. Like.. there's no exact price, it's only approximations.. because even at the lowest common denominator, the individual, their values are also constantly changing... so.. there certainly can't be an exact price even if we were all to have our heads scanned and analyzed by some really good keynesian.
I don't see lack of perfect information as a "problem with the market" .. well, it's as much of a problem as "people can't fly" or "move through walls" if you know what I mean.
Haha, that's very true. It is very interesting to learn through conversation and civil debate. ^_^ That point, I agree on. An equilibrium price, as far as I'm concerned, is an ideal. Much like infinity,you can get the idea, but to reach it is incredibly difficult. Nonetheless, to have the idea there as an indicator is still useful, much like how the concept of infinity is useful in mathematics.
Hmm, well, I highly disagree on that point. =/ See, the market works because there is a struggle between two forces, both of which are trying to do the best for their own good, to make a mutually beneficial choice. I think of it much like a court room, where two sides battle it out to find the truth of the matter. However, if one side suddenly doesn't have a crucial witness, or piece of information, the system falls apart. =(
Define "fall apart". Certainly one would come up on top in that case but the fact that there was a conference in the first place shows you that these people were willing to engage in their dispute civilly and adhere to the jury or judge's decision!
EPT
Sorry if I'm frustrating you. 
