Relative Price Adjustments and Aggregate Demand

by Don Boudreaux on November 29, 2008

in Complexity & Emergence, Great Depression, Myths and Fallacies, Prices

Some persons understand the role of relative prices — understand that prices work only if they are permitted to adjust in order to reflect relative scarcities — understand that the hardships that sometimes accompany such adjustments are the necessary price to pay for the fact that persons yesterday got the once-good jobs and built the once-good businesses that are so painful to lose today.

Other persons, upon encountering an unusually large number of price adjustments occurring simultaneously, worry that catastrophe looms.  To avoid this awful outcome, they demand more demand.  They demand either more money be injected into the economy, or more direct spending by government.  The idea is to raise demands across the board to levels that will make the old prices — the pre-adjustment prices — work as they worked before the underlying reality changed.

"If only people spent as much as they spent before, all would be well," these demand-more-demand people imagine.

One of the many blind spots in this view is that it causes its adherents to overlook the underlying changes in reality that sparked the price-adjustments in the first place.  It’s dangerous business to ignore this reality by trying to recreate, as a kind of facade, the economic outcomes that prevailed before the underlying reality changes.  It’s ultimately futile as a means of restoring vigor to a market economy.

Amity Shlaes in today’s Wall Street Journal does a great job explaining some faulty reasoning of those who insist that the problem with economic downturns is inadequate aggregate demand.

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Russ Nelson November 29, 2008 at 8:25 am

Shlaes is kicking Krugman's butt, and without the benefit of Krugman's faux Nobel Prize.

Unbathed November 29, 2008 at 9:49 am

Some people understand that when policy option A will make winners of X and losers of Y, whilst policy option ~A will make losers of X and winners of Y, that the wise thing to do is make the policy option which results in the greater net winnings and compensate the losers with a portion of the winners' gains.

vikingvista November 29, 2008 at 11:00 am

Some people understand that it is possible for people to be winners or losers by their own right, even in spite of policy decisions.

Some people understand that thieves don't care.

Some people understand that human greed for confiscating value from their innocent neighbors is found from the lowliest pickpocket to the most sanctimonious educated socialist sophist.

Some people understand that 'making a policy' does not carry the same moral burden as 'not making a policy'.

Some people understand that making winners and losers is an ignoble goal of any policy making.

Some people understand that 'the greatest good for the greatest number' is a recipe for minority persecution.

Some people understand that over time, 'the greatest number' is likely to be excluded from 'the greatest good'.

Ray G November 29, 2008 at 11:16 am

RE: Looming catastrophe

I was an advisor with Morgan Stanley in 03 when the market was in the 7000s. Perspective clients would ask me about how low the market was, and how were they to know the market would ever come back up.

The simple answer was this; I'd ask them "Do you want to do better, financially, tomorrow than you did today? Do you know anyone in their right mind who consciously wants to do worse?"

An economy is – loosely speaking – a collection of people who all want to do better tomorrow than they did today. The natural direction is up. The only thing that can stop that natural direction is government intervention.

Even allowing for boom/bust cycles, natural disasters, even war, if there remains a basic legal infrastructure for allowing people to go about their business, the natural direction for any economy is up, or better.

A loss of personal liberties, property rights, etc are the only instances that would spell "catastrophe."

Thus the automobile was catastrophic for the blacksmith, but even that wasn't overnight.

I did a couple of semesters as an art student, and had a comically bitter instructor who had once been a typesetter. He couldn't mention the word computer without his face dropping a bit, and this eerie twinge coming into his voice and he mutter some derogatory thing about computers. The computers really whacked the typesetters but who wants to give up their PC so that guy can go back to a very good living setting metal type?

Sam Grove November 29, 2008 at 11:36 am

Some people understand that leaving their fates in the hands of policy makers will result in policies that benefit the policy makers most of all.

Sam Grove November 29, 2008 at 11:38 am

The greatest good for the greatest number is a far cry from what is best for all.

cpurick November 29, 2008 at 12:07 pm

Excellent, Sam.

You've observed that the true "common good" applies to everyone.

Martin Brock November 29, 2008 at 12:32 pm

The greatest good for the greatest number …

This simplistic summary is not utilitarianism. First, Bentham himself would have recognized this formulation as redundant, because a first principle of an ethical system cannot presume "good", since the whole point of an ethical system is defining "good".

As a hedonist (in the non-pejorative sense of this term), Bentham understood utility in terms of "happiness" and spoke summarily of a "greatest happiness of the greatest number", but this formulation is obviously very vague, and Bentham well understood its potential abuses by statesmen. He specifically addresses this issue in an addendum to Principles of Morals and Legislation.

"… the greatest happiness of the ruling one with or without that of a favoured few, are now so plainly seen to be the only ends to which the course of it has at any time been directed. The principle of utility was an appellative, at that time employed by me, as it had been by others, to designate that which, in a more perspicuous and instructive manner, may, as above, be designated by the name of the greatest happiness principle. "This principle (said Wedderburn) is a dangerous one." Saying so, he said that which, to a certain extent, is strictly true: a principle, which lays down, as the only right and justifiable end of Government, the greatest happiness of the greatest number — how can it be denied to be a dangerous one? Dangerous it unquestionably is, to every government which has for its actual end or object, the greatest happiness of a certain one, with or without the addition of some comparatively small number of others, whom it is matter of pleasure or accommodation to him to admit, each of them, to a share in the concern, on the footing of so many junior partners."

If you want to read more of Bentham and the rest, you can do that. Later utilitarianism is more about "preference" than "happiness", because "happiness" is difficult to measure. "Preference" is what we get when we make a choice in a market. If you actually read Bentham's prescription for a system of law with the ends he champions, you find him writing a Defence of Usury for example, wherein he describes the merits of unrestricted money lending (by individual property owners), widely considered a terrible sin in his time.

… is a far cry from what is best for all.

Right. "Best for all" is so much clearer than "greatest happiness for the greatest number". How can "best for all" be a definition of what is "good" (or "proper") when "best" itself is the superlative form of "good"? This construction is obviously circular. Bentham is hardly beyond reproach, but at least he understood this point.

Ray G November 29, 2008 at 12:41 pm

Another Benthamite: Pete Singer in a very revealing interview with Reason mag.

http://www.reason.com/news/show/27886.html

Martin Brock November 29, 2008 at 12:54 pm

Another Benthamite: Pete Singer in a very revealing interview with Reason mag.

The point being what?

Here's David Duke praising Milton Friedman. Now, we know what all those Friedmanites really think.

Martin Brock November 29, 2008 at 1:02 pm

Correction. It's not David Duke praising Milton Friedman. It's David Duke praising someone praising Milton Friedman. In the guilt by association game, surely that's good enough.

Unbathed November 29, 2008 at 2:13 pm

Ray G,

Thanks for the pointer to the Singer interview. I like this exchange:

Reason: So the moral choices that people make change with advances in technology?
Singer: Yeah. The morality of the situation depends on the consequences of what you're doing.

Are Benthamites necessarily consequentialists?

It appears that Don is in this post arguing as a consequentialist. I believe he claims that price-maintenance policies are mistaken not because such policies lack virtue, but because they will lead to a worse general outcome.

Sam Grove appears to be arguing that it is a mistake to follow policies which benefit untenured policy-makers, yet it is not a mistake to follow price signals which benefit price-makers; some invisible hands are more reliable than others, perhaps.

MnM November 29, 2008 at 2:42 pm

"Sam Grove appears to be arguing that it is a mistake to follow policies which benefit untenured policy-makers, yet it is not a mistake to follow price signals which benefit price-makers; some invisible hands are more reliable than others, perhaps."

Posted by: Unbathed | Nov 29, 2008 2:13:45 PM

Who makes prices?

Prices, free from the regulation of policy-makers, are set by the interaction of supply and demand.

We're all "price-makers".

Martin Brock November 29, 2008 at 3:39 pm

Prices, free from the regulation of policy-makers, are set by the interaction of supply and demand.

Which prices are free from the regulation of policy makers?

We're all "price-makers".

All animals are price makers, but some animals make more prices than others.

Martin Brock November 29, 2008 at 3:46 pm

I believe he claims that price-maintenance policies are mistaken not because such policies lack virtue, but because they will lead to a worse general outcome.

I suppose he claims that price-maintenance policies lack virtue because they lead to a worse outcome, and I suppose this claim makes him a consequentialist.

What else do you want to call "virtuous"?

MnM November 29, 2008 at 4:04 pm

"All animals are price makers, but some animals make more prices than others."

Posted by: Martin Brock | Nov 29, 2008 3:39:40 PM

Cute. You haven't said anything, but at least you're well read.

dg lesvic November 29, 2008 at 4:27 pm

Maybe I'm missing some vital points, because I just don't have the patience to read all this stuff carefully.

But there seems to be a pattern here.

Boudreaux confronts the real world, and at least some of the commentators here routinely retreat from it into their own little worlds.

At the risk of falling into that trap, let me make a quick effort to settle what appear to be the sectarian issues here, and, if unable to do so, will get right back to the real world with Boudreaux and Company.

Most importantly, keep your ethics and morality to yourself. For, to the public, that is like spinach to a small child. You may think it's good for him, but he hates it, and the mere mention of it will defeat your purpose right from the start.

So, whatever Bentham or anyone else was, you should be a utilitarian, and as a lover of liberty, a utilitarian voluntarist.

Since only the strong could have freedom for aggression, and everyone freedom from it, freedom for all implies freedom not for but from aggression, the right to be let alone, to offer or withhold one's own resources, and none but one's own.

And since there could be no right to aggression, to rape, to force yourself on others, that is the only civil right there is.

So the free society is the voluntarist society, and not minimally but completely so. For there is nothing the state could do for us that we couldn't do better and cheaper for ourselves, with but one exception: taking from one to give to another.

And that is why, as Boudreaux has stated, redistribution is "the bottom line;" as Mises stated, "the essence of the interventionist policy;" and as Hayek stated, "the crucial issue on which the whole character of future society will depend."

And since, as Hayek also stated, it would be "disingenuous to avoid discussing" it, it would be nice if once and while we got around to it.

dg lesvic November 29, 2008 at 4:36 pm

I wrote:

"So the free society is the voluntarist society, and not minimally but completely so."

That was clumsy. For, of course, I wasn't referring to a minimally free society but a minimally invasive state.

dg lesvic November 29, 2008 at 4:44 pm

For another thing, this was not to imply that everyone should drop everything else for redistribution.

For all of the other work here is absolutely essential, and you don't tell Rachmanninoff to drop what he is doing and do what Shostakovish is doing, nor vice verse.

You let genius alone, and be grateful for whatever its gifts.

We have the best economics of our time right here, and I would hope only to contribute to but not disturb it.

That wasn't the case at that other place. Those sleepwalkers needed to be disturbed.

Ray G November 29, 2008 at 7:47 pm

Professor Boudreaux's basic point:

Price conveys information.

A ball point pen with a price tag of $40 conveys that there is something else involved here besides a writing utensil. A Bic worth a few cents conveys basic writing utensil.

When extra-market forces start fiddling around prices, they strip away the validity of the information normally conveyed by price, and things just get out of whack, and always for the worse.

The utilitarian slant is just Martin & Co. hijacking the blog as usual. I threw the Peter Singer interview in their for fun.

It's only related to the discussion at hand very indirectly, but for the quiet ones reading along who care to know more, it has more to do with the ancient argument of whether or not there is an objective morality, a universally known right and wrong.

Bentham and his subscribers say "no" as Singer illustrates in the interview. Most rational people believe that murder or theft are universally known as wrong, but the traditional Benthamite answer is that murder is not beneficial to society and thus we've ingrained the idea of it's objective immorality into our society.

Thus, sex with children and animals is generally frowned on in today's society, but it could become a perfectly valid and "moral' practice in tomorrow's society, since there is not set, objective right and wrong.

It also makes a convenient stepping stone to collective economic plans. The good of the community over the individual, and all that.

muirgeo November 29, 2008 at 7:51 pm

Yes, indeed, I love the internet. Everyone is on record. Amity and the professor predicting an Obama lead Depression.

This time after the Republican lead laissez faire disaster the democrats will be taking over more along the 1931… a full 2 years earlier into the disaster. Likewise they will have the hindsite of FDR´s mistakes as well as his successes.

If only there was another exact world like this for the Amity´s and the libertarians to not manage, should be in quotes but these Costa Rican key boards don´t work like ours, it would be interesting to compare outcomes.

But if no great depression follows I´m sure they will have ready made explainations.

Somehow Amity is cock sure that doing nothing would be far better but again she leaves us thirsting from whence her great knowledge and the data to support it comes.

Anonymous November 29, 2008 at 8:03 pm

Cute. You haven't said anything, but at least you're well read.

You didn't answer my question either.

Martin Brock November 29, 2008 at 8:11 pm

Since only the strong could have freedom for aggression, and everyone freedom from it, freedom for all implies freedom not for but from aggression, the right to be let alone, to offer or withhold one's own resources, and none but one's own.

Right. Define "aggression". Typically, this word simply means my force imposed over your own threat of force. And what are "your own resources"? How do I distinguish "your resources" from "my resources"? Do I just take your word for it? Does Locke decide? He's dead. Who decides what Locke meant?

So the free society is the voluntarist society, and not minimally but completely so.

Fine. So there are no free societies. Unicorns don't exist either.

Where does either Mises or Hayek say this?

Ray G November 29, 2008 at 8:21 pm

Also, comparing Peter Singer to David Duke is woefully inaccurate, and even dishonest depending on how well read the person is making such a statement.

Singer is quoted often in the mainstream press as a mere academic with all of the anonymous credibility that goes with it.

Or, in other words, he is not shunned for his ideas as David Duke is shunned. He is a member of the Left wing elite in good standing.

Gil November 29, 2008 at 8:28 pm

"Most rational people believe that murder or theft are universally known as wrong . . ."

This seems like a tautology. Murder is unjustified killing and theft is unjustified taking. The difference between what is justified killing/taking and unjustified killing/taking would change with time and people.

MnM November 29, 2008 at 8:31 pm

"You didn't answer my question either."

I'm sorry, I thought the question was both rhetorical and irrelevant, as it missed my point entirely.

Your answer:
eBay, transactions between friends, etc.

Martin Brock November 29, 2008 at 8:36 pm

The utilitarian slant is just Martin & Co. hijacking the blog as usual. I threw the Peter Singer interview in their for fun.

Of course. You couldn't be hijacking the blog, because this use of "hijack" just wouldn't be proper.

Bentham and his subscribers say "no" …

This statement could hardly be further from the truth. The whole idea of utilitarianism is to provide an objective basis for morality. Bentham never uses the term "objective" himself as far as I know, but Dr. William Sweet of St. Francis Xavier University in the Internet Encyclopedia of Philosophy does.

"For Bentham, morals and legislation can be described scientifically, but such a description requires an account of human nature. Just as nature is explained through reference to the laws of physics, so human behavior can be explained by reference to the two primary motives of pleasure and pain; this is the theory of psychological hedonism.

"On this view, pleasure and pain are objective states and can be measured in terms of their intensity, duration, certainty, proximity, fecundity and purity. This allows then both for an objective determination of an activity or state and for a comparison with others."

… as Singer illustrates in the interview.

Never mind that he never says anything about "an objective morality" in the interview.

Most rational people believe that murder or theft are universally known as wrong, …

"Murder" and "theft" are both legal terms, the definition which can and certainly does vary from state to state.

.. but the traditional Benthamite answer is that murder is not beneficial to society and thus we've ingrained the idea of it's objective immorality into our society.

O.K. Where does Bentham say anything like this? This is not at all how Bentham uses "morality" in Principles of Morals and Legislation. Bentham would say that murder is immoral because the crime objectively diminishes happiness and inflicts suffering. His claim is that reasonable men can agree objectively on when happiness is diminished and suffering is inflicted, thus this standard is not subjective.

It also makes a convenient stepping stone to collective economic plans.

So you say. I suppose I won't be supporting you for Utilitarian Philosopher King anytime soon. The problem with your analysis of "Benthamites" is that Bentham himself did not say so.

Martin Brock November 29, 2008 at 9:00 pm

Also, comparing Peter Singer to David Duke is woefully inaccurate, and even dishonest depending on how well read the person is making such a statement.

Since I never compared Peter Singer to David Duke, I'm happy to agree, but this agreement does not imply the validity of any specific conclusion that Singer, who is an iconoclast, reaches on nominally "utilitarian" grounds.

Reason on Singer:

"Singer has made similarly controversial plunges into social policy. In a recent New York Times Magazine essay, he argued that the affluent in developed countries are killing people by not giving away to the poor all of their wealth in excess of their needs. How did he come to this conclusion? 'If…allowing someone to die is not intrinsically different from killing someone, it would seem that we are all murderers,' he explains in Practical Ethics."

Of course, Reason doesn't quote Singer here, and I have no idea what's missing in the ellipsis. Regardless …

Paul Roach on Bentham:

"The Poor Law Amendment Act of 1834 resulted from the middle class' use of utilitarian principles as well. The belief that the old poor laws were demoralizing to those who received relief was a primary cause for reform. Equally important was the economic burden produced by the administration of the poor laws. The administration of the old poor laws had risen in cost from 619,000 pounds in 1750 to almost 8,000,000 pounds in 1818. The means of supporting these costs fell on the landowners who now had sufficient reason to hope for poor law reform. The Poor Law Amendment Act of 1834 was passed and Edwin Chadwick, once Bentham's personal aide, was made secretary of the Poor Law Commission."

Sounds like Bentham himself would have hotly contested Singer, yet you seem convinced that Singer epitomizes "Benthamites", while Bentham himself would more have inspired Ronald Reagan in this regard. Maybe the problem is that you don't have a clue what Bentham thought about anything, aside from popular summaries like "greatest happiness for the greatest number" and fashionable interpretation of this maxim today.

Or, in other words, he is not shunned for his ideas as David Duke is shunned. He is a member of the Left wing elite in good standing.

Right. You don't shun the "Left wing elite in good standing" here. You think they're just peachy.

Define "Left".

Martin Brock November 29, 2008 at 9:12 pm

eBay, transactions between friends, etc.

When I transact with you on ebay, friend, how do you know that I'm entitled to transfer a particular good to you?

MnM November 29, 2008 at 9:25 pm

"When I transact with you on ebay, friend, how do you know that I'm entitled to transfer a particular good to you?"

Posted by: Martin Brock | Nov 29, 2008 9:12:32 PM

Entitlement? The transaction is an agreement. You continue to miss the point that I made.

Martin Brock November 29, 2008 at 10:13 pm

Entitlement? The transaction is an agreement. You continue to miss the point that I made.

I'll rephrase the question. When I transfer a particular good to you on ebay, friend, how do you know that I own it? For that matter, how do I know that I own it? If you want to reiterate some point I'm not addressing, you can do that.

MnM November 29, 2008 at 10:23 pm

Your first question:

I don't, unless I happen to know you personally.

Your second question:

Given that the question is leading, I'm guessing you would like a discussing of property rights.

You, first, asked me what prices were untouched by policy makers. I provided two examples: eBay, and transactions amoung friends. If I were to trade, for example, a novel, with a friend for $5.00 that price is untouched by regulators. The price is arrived at by the interaction of the supplier of the book (myself) and the person demanding the book (my friend). Third parties have not inserted themselves in any way.

I fail to see how your questions are leading to a refutation of my assertion.

dg lesvic November 29, 2008 at 10:47 pm

Martin Brock,

You asked me to define aggression.

It is the use of force or fraud in the initiation of interaction.

You asked, what are "your own resources?"

I can either follow you and that question into one of those endless sectarian disputes, with no practical purpose, that I had complained about, or follow Boudreaux into the real challenges before us.

I'm with Boudreaux.

MnM November 29, 2008 at 10:49 pm

Whoops. I just noticed a spelling error. I don't recall if I was going to use the word "among" or "amoungst". Either way, my apologies for the mistake.

MnM November 29, 2008 at 10:56 pm

Upon reflection, neither word contains a "u". Time for a new spell-checker I suppose.

Greg Ransom November 30, 2008 at 12:04 am

Don, you're acting as the Toto of the economics profession here, pulling back the curtains on the fraud which is academic macroeconomics.

By all rights you should have your tenure removed, your Ph.D. should be stripped from you and you should be once and for all expelled from the Holy church of economics.

Sacrilege I say!

Greg Ransom November 30, 2008 at 12:07 am

"Some persons understand the role of relative prices — understand that prices work only if they are permitted to adjust in order to reflect relative scarcities"

If you were doing a full disclosure Don, you'd add that group includes only about 6 or 7 macroeconomists in all of the United States.

Martin Brock November 30, 2008 at 3:55 am

Given that the question is leading, I'm guessing you would like a discussing of property rights.

We can discuss property if you want, but my point follows an earlier point. You wrote, "Prices, free from the regulation of policy-makers, are set by the interaction of supply and demand." I responded, "Which prices are free from the regulation of policy makers?"

The whole idea of a market with supplies and demands presumes property a priori, and property presumes a rule of law presuming law makers (a.k.a. policy makers) and thus a state, in the minarchist way of thinking.

However minimal the state is, however limited the powers of rulers, however democratic their succession, however clear and concise the rules they make, markets don't exist without things to exchange, and property is precisely what we're entitled to exchange in a market, and property requires policy making fundamentally, whether it's John Locke's policy or someone else's policy.

"Price free from the regulation of policy makers" is meaningless. It's a contradiction in terms. Property is not natural as opposed to artificial. It is precisely what human beings compel one another to accept in the truce of civil society.

You, first, asked me what prices were untouched by policy makers.

You, first, presumed prices untouched by policy makers.

I provided two examples: eBay, and transactions amoung friends. If I were to trade, for example, a novel, with a friend for $5.00 that price is untouched by regulators.

No. This price is not an attribute only of our isolated transaction. It also reflects our other options. It reflects opportunity costs. It reflects supply and demand as you say. Your single copy of a novel is not the "supply". If someone offers me the same novel for four dollars, I don't pay you five, so this agreement is not simply between the two of us. We are not the market. Without copyrights, a supply of novels might not exist at all, and the particulars of copyright protection affect the supply and thus the price of novels.

Our bargain is not independent of the particulars of property and are not untouched by policy makers. Without the evolving concepts of property, markets and money, the whole idea of "price" is meaningless.

The price is arrived at by the interaction of the supplier of the book (myself) and the person demanding the book (my friend). Third parties have not inserted themselves in any way.

Certainly, they have. You're only ignoring their influence to enjoy a sense of freedom, but you're only free within the bounds of their influence. They certainly do affect the price you pay for novels on ebay.

Martin Brock November 30, 2008 at 4:05 am

It is the use of force or fraud in the initiation of interaction.

Define "initiate".

I can either follow you and that question into one of those endless sectarian disputes, with no practical purpose, that I had complained about, or …

You can duck the question, the answer to which certainly has endless practical consequences. You can follow Don into battle, and you and Don can establish any state you successfully force unwilling participants to accept. "Property" describes rules you hope to enforce. Good luck with that.

Randy November 30, 2008 at 5:32 am

Gil,

"…and theft is unjustified taking…"

That's an interesting way to put it. Of course, there is no such thing as "unjustified" taking – every thief has a reason.

Gil November 30, 2008 at 5:46 am

And every murderer has a reason too. Boom Boom!

dg lesvic November 30, 2008 at 6:03 am

Martin Brock,

You wrote,

"You can duck the question, the answer to which certainly has endless practical consequences."

I know just what you're getting at. Beyond the definition of "resources" that would be obvious, there may be a gray area in which disagreement could arise.

But that is true throughout life. And yet people manage to work around such disagreements, coexist and cooperate, because they value what they agree upon more than what they disagree upon. My wife and I have had disagreements, but have still managed to live together for almost 50 years and raise a family, because we valued what brought us together more than what would tear us apart. Even Republicans and Democrats can co-exist peacefully, and you and I can still talk.

But there is a limit. Whenever it appears to either party to an exchange that the other is working against rather than for it, it must end.

You and I are very close to that point. As far as I'm concerned, this is your last chance to make sense. If you blow it, I'm through with you forever.

Unbathed November 30, 2008 at 7:50 am

dg lesvic,

Two questions:

When you buy, at a price agreeable to you and the seller, goods which the seller obtained by violence from the unwilling, does that voluntary purchase transaction make the goods your resources and end all prior claims?

Do you claim that Holder in Due Course protocols are not the work of policy-makers?

Unbathed November 30, 2008 at 7:59 am

Ray G wrote:

He is a member of the Left wing elite in good standing.

That a proposition is popular with a particular group, or is advocated by a particular person, has no bearing on the truth value of that proposition; so why bring it up?

Martin Brock November 30, 2008 at 8:57 am

… there may be a gray area in which disagreement could arise.

That's the understatement of the age. Disagreements over property arise routinely. We're constantly disputing property rights here, the rights of beneficiaries of Obama's spreading around of the wealth for example. Much more mundane disputes are also routine, like the precise boundary of a parcel of land, rights to water flowing across a parcel, rights to sunshine falling on a parcel, rights to emit noise from a parcel, rights to deter or remove trespassers from a parcel, rights to construct an attractive hazard on a parcel, the precise meaning of "attractive hazard". The list is endless, and the law fills libraries.

Even Republicans and Democrats can co-exist peacefully, and you and I can still talk.

So if we aren't literally in armed rebellion, all is well? All is voluntary? All is the market? Further spreading around of wealth in the U.S. is fine as long as Republicans and Democrats co-exist peacefully? While the truce is sufficiently respected, we have nothing more to discuss?

We don't have a state of revolution or civil war here. I concede this fact. We have a state. I won't deny that one, and I don't understand why anyone wants to deny it.

But there is a limit. Whenever it appears to either party to an exchange that the other is working against rather than for it, it must end.

And this limit is the peaceful co-existence of Republicans and Democrats? We've no reason to question any forcible propriety until one of these parties starts shooting at the other? You believe yourself so plainspoken, but you raise all of these questions.

If you blow it, I'm through with you forever.

That's always up to you.

With all of the words spent on your last post, you couldn't simply define "initiate", so I have no better idea of any force you advocate than when you started. You should run for office.

Property holders unite to force others to bend to their iron will. I'm a party to this alliance of forces myself, but I'm always very skeptical of what we're doing.

Martin Brock November 30, 2008 at 9:10 am

Of course, there is no such thing as "unjustified" taking – every thief has a reason.

This idea of "unjustified taking" is meaningful only insofar as "just" is synonymous with "lawful" and "law" describes standard rules agreeable to authorities imposing force. "Justice" obviously does not describe any rule any individual prefers, even if it's a rule that Jesus or Murray Rothbard preferred.

Unbathed November 30, 2008 at 9:20 am

The real world and home ownership rights:

A US businessman vowed last week to fight an Israeli eviction order against a group of Jews living in a house in the West Bank city of Hebron he says he bought. The Palestinian owner of the house, however, said the sale was never completed, and an Israeli court ruled that documents provided by the settlers were forged. Jerusalem Post

Some people understand that price-based markets perform better under the rule of law; but for others, the policies and regulations which enable their markets to deliver prosperity are as invisible as water is to fish.

Martin Brock November 30, 2008 at 10:14 am

Some people understand … but for others …

Can you distinguish the former from the latter in the context you cite?

cpurick November 30, 2008 at 10:46 am

It's nothing short of amazing to see the rationalization at work in the minds of our resident useful idiots.

MnM November 30, 2008 at 10:56 am

"The whole idea of a market with supplies and demands presumes property a priori, and property presumes a rule of law presuming law makers (a.k.a. policy makers) and thus a state, in the minarchist way of thinking."

That the market presumes property has little/no effect on the price of an item. You haven't refuted my point at all, Martin.

"This price is not an attribute only of our isolated transaction. It also reflects our other options. It reflects opportunity costs. It reflects supply and demand as you say. Your single copy of a novel is not the "supply". If someone offers me the same novel for four dollars, I don't pay you five, so this agreement is not simply between the two of us."

Now you seem to agree with me that prices are determined by supply and demand. Why did you bother responding to my post in the first place? I have no desire to split split-hairs with you.

"We are not the market."

No, we're a market. Markets do not exist only in the aggregate.

"You're only ignoring their influence to enjoy a sense of freedom, but you're only free within the bounds of their influence. They certainly do affect the price you pay for novels on ebay."

I'm not ignoring anything, Martin. As you said, the market presumes property (to some degree). I had no desire to make this a discussion of prperty rights, precisely because what we are talking about is not property, but prices.

That a legal framework exists to protect property rights has no bearing on the price of an item. That price is still arrived at by the supplier and the seller.

You're written much, Martin, but you haven't written anything that is particularly relevant to pricing and you've done nothing to refute my earily point. In fact, while attempting to disagree with me, you've agreed with me.

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