Pinko

The answer to your questions is that governemnt agencies don't care about what's good for society in the aggregate. They only care about their own existence and perpetuation. By this they are entirely poltical. Read Gordon Tullock's works for an elaboration of this.

According to the true principles of spontaneous order, everyone is self serving, and from this so-called unprincipled selfishness, competition creates spontaneous as well as unintended compromises, which tend to diffuse concentrations of power and lead toward a more equal sharing of power-or libertarian condition over time--a long time.

According to this theory, even Mr. Boudreaux is selfish. His posturing for a libertarian political economy is how he earns his reputation and income. Just because he advocates these ideals doesn't mean that he'd back away from an opportunity to improve his reputation and circumstances if he had to compromise them. Only hypothetically, is Mr. Boudreax a libertarian. Only when he has no chance of being more powerful than what a libertarian order would allow him, is he then a libertarian, etc.

If I weren't correct in the what I just wrote, then Lord Acton wouldn't have been correct when he wrote that "power corrupts and absolute power corrupts absolutely." Ths means that all men are totalitarian, given opportunity, and only through competition to dominate, is equality under law spontaneously brought forth.

The intellectual error of Mr. Boudreax and others like him is their failure to include themselves in the spontaneous process, and/or of possessing the same human nature as every one else. But that is the beauty of spontaneous order--it is always unintended! No one ever truly acts for the sake of others, so advocating a political economy that would be good for "society as a whole" is disingenuous from the start.

"No one ever truly acts for the sake of others, so advocating a political economy that would be good for "society as a whole" is disingenuous from the start."

I agree that the idea of "society" is propaganda. I disagree that no one acts for the sake of others. Business people act for the sake of others all the time. A business that doesn't care about its customers doesn't last long. And come to think of it, political organizations also act for the sake of their customers, as they too don't last long if they don't. Which brings us back around to the fact that "society" is just propaganda. Neither businesses nor political organizations truly care for "society as a whole", though they both care for their customers.

>>I disagree that no one acts for the sake of others. Business people act for the sake of others all the time. A business that doesn't care about its customers doesn't last long.<<

Right. However, this is only done because by doing so, it allows the business to profit; the flip side of the 'invisible hand'. Smith got it correct nearly two and a half centuries ago.

Appearance and reality are two separate things. The theory of spontaneous order is based upon the principle of psychological egoism, or self love, as being the root cause of all human action, and thought. Everything you do is to reinforce the feelings you have about yourself. Rothbard called this "psychological revenue". You act charitably first to feel good about yourself based on your held values, or to be loved, respected or held in esteem by others. It is only secondary that others are benefited.

Spontaneous order can be seen in non-conscious systems (the human body, for example), so it does not depend on egoism.

Also, even if humans were not self-interested, order could still emerge out of the chaos of their actions. It would look different, but you would still get spontaneous order.

"Right. However, this is only done because by doing so, it allows the business to profit; the flip side of the 'invisible hand'. Smith got it correct nearly two and a half centuries ago."

Wow. What a sick sad view of humanity. If I believed that I'd go outback and just soot myself. Fortunately it's not true.

I remember the oldest living person at the end of the millennium saying something that was the obvious wisdom of someone with so much experience being a person and living through some much history. She said the most amazing thing she found in life was how good people can be and how evil they can be.

Thinking just like an economist destroys ones humanity.


The old, the price of everything and the value of nothing quip is relevant.

The fact is we are social animals and altruism is real and it is in our genes. Hayek apparently didn't believe in altruism.. and that is were he goes so wrong.

Society is not only in our genes it is the reason for our success and markets are simply and outgrowth of those more basic properties of our species.

If I believed that I'd go outback and just soot myself.

I don't know if that was meant to be "shit myself" or "shoot myself". Something tells me you have already accomplished the former. Let nothing stand in the way of the latter.

Bwahahahaha!

Thanks for my laugh of the day, Methinks!

Wow you really aren't a nice person are you? In fact my participation here HAS given me such a view of libertarians in general... most aren't very nice people from what I can tell. And the ideology fits

Anyway too bad for you I don't believe people are all as dreary as you and I'd never "soot" myself cause I am a very happy, fortunate and optimistic person.

Your "view" of libertarians is based on their frustration that you continue to say the same statist, trite expressions time and time again, in spite of evidence to the contrary extended to you by well meaning individuals. You feel righteous in your support of state interventions, and any threat to that righteousness is a threat to your worldview. Everyone starts as a statist, and some manage to throw off the yoke; you're not one of those, and don't like those that have.

Wow you really aren't a nice person are you?

From the first day you entered the Cafe, you've done nothing but advocate confiscation of the wealth of people who produce, and you expect them to like you. You claim for yourself the title of noble altruist because of your desire to spend our money for us, and you expect us to like you. You are jealous of others' success, and envious of others' achievements, and you've been generally rude to those who disagree with you, and your attitude toward Methinks took an even nastier tone three years ago, when you found out what she does for a living.

But she's not a nice person for giving back exactly what she's gotten from you? Your jealousy is showing again, Yasafi. You can only wish to possess the wit to cut as surgically as she just cut you.

How can I possibly be a "nice" person when I'm a Wall Street paper-pushing asshole according the our resident Wall Street scholar, Muirdog?

To useful idiots, "nice" is someone who agrees to submit to slavery or join their circle of thieves.

Exactly.

No "nice" is NOT some one who looks at this graph;

http://3.bp.blogspot.com/_n5ROGN0Id8Q/SwqTxQV5A...

and shrugs their shoulders assuming it means nothing. While in fact it explains that plight of the typical over stressed working families I see everyday busting their butts to make ends meet. The truly good and productive people suffering while people of unimaginable wealth decide they need 3 times as much.

I am NOT the one advocating stealing or providing cover for thieves.

Every time I think you can't actually get MORE stupid over time, you prove me wrong.

Oh, and how convenient that you found time to respond to Methinks, but these three questions from Robert_O remain unanswered:

Why do you need the taxpayers to fund your credit operation? Why can't you create your own bank, muirbank, where you give out credit to poor people at low interest? Why must you rob me to feel good about yourself?

Quack... Quack... Quack...

I responded that banks HAVE access to treasury funds.

Brotio can you get a loan for 0%. The banks can. You think that cost you nothing...FOOL!

Don't you think maybe you and I should have the same access to the treasury as banks?

Are you completely incapable of reading comprehension?

The questions are:

Why do you need the taxpayers to fund your credit operation? "Banks have access to treasury funds" is not a coherent answer to that question. Other than you, and possibly Yabbut, none of us here supported the bank bailouts, and not many (if any) of us supports the Fed. That's about the millionth time that's been pointed out to you.

Why can't you create your own bank, muirbank, where you give out credit to poor people at low interest? "Banks have access to treasury funds" is not a coherent answer to that question.

Why must you rob me to feel good about yourself? "Banks have access to treasury funds" is not a coherent answer to that question.

Are you completely incapable of reading comprehension?

That's a rhetorical question, yes?

Of course!

Don't you think maybe you and I should have the same access to the treasury as banks?

You lobby to give the government this kind of power, and then you're shocked that they use it.

The government shouldn't be loaning money to banks. Why do you think they should?

congratulations. Thanks for clearing that up because I spent the entire day worried about your level of optimism and what you thought of Libertarians.

Don't let the fact that you're happy and optimistic keep you from sooting yourself intentionally. You could instead soot yourself accidentally.

Don't let the fact that you're happy and optimistic keep you from sooting yourself intentionally. You could instead soot yourself accidentally.

>>Wow. What a sick sad view of humanity. If I believed that I'd go outback and just soot myself. Fortunately it's not true.<<

George: many times the 'profit' one recieves from doing some kind of action is the satisfaction of knowing that one has helped someone else. But, yeah, I honestly believe that no one is motivated to act unless one derives some kind of benefit -- a benefit which simply could be satisfaction/gratification from an altruistic act -- from doing so. Please forgive me for not stating this earlier [though I should have known that you had not internalized previous things that have been explained to you] but I thought you'd recall past discussions on Homoeconomicus. I wont be shooting myself anytime soon, George...at this moment [and for the forseeable future] there's no satisfaction to be had in doing that.

Muir, Mmmmmwwwwaaaaahhh,

It will be awesome when you quote Hayek from TRTS next time to support your favorite welfare programs. You are just fantastic, because you say altruism is natural to human beings, yet like Al Gore you don't want to depend on natural altruism but a government mandated one. LOL. On our way to our first billion. Mmmmmmwwwwwaaaaahhhh

Every act you described was either a secondary motive or unintended byproduct of the primary selfish motive. Keep in mind that selfishness includes the gratification of one's ego, not just monetary profit. A thorough reading of Austrsain economics explains this.

The idea of "society" is propaganda? Really? You expressed that thought in a language read and understood not by everyone on earth, but by a subset, via a mechanism created by people with vested interests that are protected by another subset. Seems to me that if "society" really were propaganda alone, you'd have trouble expressing that thought to many people outside of the sound of your own voice, no?

I think intellectual navel-gazing as much as the next guy, but I have always had trouble with the more philosophical tangents people get on. Writing that society is propaganda has a nugget of truth and "shocking" statements about philosophical abstractions are attention-grabbing and fun, but deep down most people don't actually believe them in their core. I think David Hume was a brilliant man and a fascinating read, but his causation stuff is mostly pointless mental gymnastics. I mean, if he really believed in what he wrote, why would he bother writing books, since his volition and the subsequent movements of a pen don't necessarily "cause" words to appear, according to him.

"Really?"

Yes, really. More precisely, society is a classification - an idea. The idea becomes propaganda when those in the political class claim the right to speak in its name.

Ths means that all men are totalitarian, given opportunity, and only through competition to dominate, is equality under law spontaneously brought forth.

Perhaps it would be closer to the mark to say that "all men are totalitarian, absent opportunity or other restraint".

Also, are you supposing that there are no people who have no interest in exercising totalitarian power over others?

I would find that hard to accept given my own lack of interest in wielding such power. I think there are many more interesting things to do. Emphasis on the "interesting".

All in my own self interest, of course, I prefer spend my time in pursuit of things that interest me, that engage my mind. Political power offers no such reward for me.

And what does Mr. Mandeville get from posting first? While he did us a big favor by crowding our Daniel and George, he also, selfishly, set the tone of this comment debate, contributing to a new spontaneous order of discussing whether our hosts would walk the walk outside of the order they find themselves in. All I know is that they wouldn't be as interesting.

Most of what you say does not make any sense in that it does not address the issues that were raised.

Their mission statement sounds good to me. In fact the general public should have access to government run banks and credit cards. Public Option banks and credit cards. Sounds like a great idea. People who want 30% credit card interest rates can go to the private sector and get screwed all they want while rational people could get credit and loans for much more fair rates. Why should only some people /institutions get direct access to the treasury money? Especially now that we know what a shitty job the private finance sector does.

Mission

The Export-Import Bank of the United States (Ex-Im Bank) is the official export credit agency of the United States. Ex-Im Bank's mission is to assist in financing the export of U.S. goods and services to international markets.

Ex-Im Bank enables U.S. companies — large and small — to turn export opportunities into real sales that help to maintain and create U.S. jobs and contribute to a stronger national economy.

Ex-Im Bank does not compete with private sector lenders but provides export financing products that fill gaps in trade financing. We assume credit and country risks that the private sector is unable or unwilling to accept. We also help to level the playing field for U.S. exporters by matching the financing that other governments provide to their exporters.

Ex-Im Bank provides working capital guarantees (pre-export financing); export credit insurance; and loan guarantees and direct loans (buyer financing). No transaction is too large or too small. On average, 85% of our transactions directly benefit U.S. small businesses.

With more than 70 years of experience, Ex-Im Bank has supported more than $400 billion of U.S. exports, primarily to developing markets worldwide.

Why do you need the taxpayers to fund your credit operation? Why can't you create your own bank, muirbank, where you give out credit to poor people at low interest? Why must you rob me to feel good about yourself?

You think private banks don't benefit or cost the taxpayer money.

So same question to you. Why should my tax dollars go to fund, loan, protect private banks?

What are you talking about? No one here supported the bailout of Wall Street... unless of course you did...

Yasafi was opposed to the bailout until Jan 19, 2009. The next day he was magically in favor of bailouts.

I wonder what happened on January 20, 2009 to change his mind?

So same question to you.

You have a lot of gall to demand an answer to a question while simultaneously ducking the questions put to you.

Robert asked you three direct questions. You didn't answer any of them.

Quack... Quack... Quack...

Yet again, charging libertarians with corporatism. Willfully ignorant muirgeo strikes! Fascists, whether left or right, are corporatist. Libertarians aren't. I expect this to change nothing in your posts, but I can't think of a way to make it more clear, and can't stand by as you continue to assert the same incorrect tripe in nearly every comment you make.

>>Especially now that we know what a shitty job the private finance sector does.<<

Did you really expect 'private' lending to work all that well when they expected to be bailed out when risky loans stopped performing? The Savings & Loan pave-over had already happened; did you really expect the quasi-governmental agencies of GNMA, FNMA, and FHLMC to not be rescued?

Thank you for putting private in scare quotes. It needs to be stated, again and again, that the banking industry is private in exactly zero respects.

What about the basic Keynesian argument that if there are unused resources in the economy, a stimulus to export industries or whatever industry will not detract from other industries? The economy is operating inside the production possibility curve and not on it. In such a case, where is the “taking resources away from other, non-export sectors?”

Keynes is dead; unfortunately his ideas live on.

It makes no difference whether we are on or under the PPC; whenever government taxes us it reallocates resources away from alternative uses. The Keynesian notion of unused resources is as silly as the paradox of thrift. As Roger Garrison points out people who save are deferring consumption for a later date; in his terms they are "saving up for something." The choice not to use private property now implies that more will be available in the future for owners to use (unless of course, government applying Keynesian illogit persuade the public writ large that it would be better if the government seized property to boost current expenditure).

And, as I've thought while hearing of the 'paradox of thrift,' when savings happen, it doesn't happen in jars in the backyard. It gets put into banks, where it is lent out to others who *previously* were saving, for their own uses. Where is the squandering?

Or it doesn't get lent out because there aren't enough positive NPV opportunities to invest in. But, if that's the case, it only means that government investments are net losers. That's the only squandering I see.

It makes a lot of difference whether we are on or inside the PPC. Inside the PPC, productive resources are not employed. You give up nothing if they are put to use, no alternatives foregone. If a private firm came in and raised capital to employ those resources to build a private toll road, I would guess that you would find no problem with that. If you find no problem in that case, why would you find a problem with the government coming in and raising capital to build the road instead?

Expanding infrastructure and rebuilding the deteriorating roads and bridges are needed, as are other public goods. Rehabilitation and adding on to the stock of public goods are complements to other resources in the economy and will increase their productivity. What more opportune time to add to public goods than now when unemployment is so high and capital equipment is mothballed?

Government production of "public goods" CAN increase productivity. This can happen either when the economy if on or beneath the PPC. The idea of resources being unemployed in the sense of having no alternative usage is a static textbook notion; it is what Coase would call "blackboard economics". In Austrian discussions of capital structure, account is taken of current and future usages. Resources that are unused today are resources that will be available for use in the future. Usage today, always involves a sacrifice of future usages. There are no free lunches.


Again, governmental production of "public goods" CAN lead to higher rates of economic growth. But there are caveats: 1) The production must be on public goods (so the issue of governmental identification of public goods arises). Examples of things called "infrastructure" that are not abound, from large airports in low air-demand areas to signage declaring "This Highway built with Stimulus Funding". 2) Whenever government produces anything the production is guided more by governmental forces (bureaucratic/political) than by market forces (prices/profits). That is, visible government planners are substituted for the private sector's invisible planners (again, prices and profits). The "fatal conceit" that Hayek highlights properly cautions that it is generally "fatal" to end results to presume that central planners can make decisions that are informed as fully as decisions made by emergent market processes. Friedman makes a similar point with his discussion of the "four ways to spend money": a) you spend your own on you; b) you spend yours on someone else; c) someone spends someone else's money on himself; d) someone spends someone else's money on yet someone else. Friedman points out that the least direct way, the one least likely to economize with care, is (d):This, of course, is the one that applies when government spends.

We agree that public goods can increase productivity. We also agree that government can make bad decisions, but so can private firms, which you conveniently leave out. We fundamentally disagree about whether there is a cost in using unemployed resources today. You state, “In Austrian discussions of capital structure, account is taken of current and future usages. Resources that are unused today are resources that will be available for use in the future. Usage today, always involves a sacrifice of future usages. There are no free lunches.”

You are mistaken. The uses of resources of today are not comparable to what those resources can be used for in the future. Technological change can make capital equipment obsolete and the equipment can deteriorate due to age and weathering. Workers’ skills can deteriorate, workers can become too old to work, and there may be no demand for the skills of today because of technological change in the future. Many of today’s unemployed resources will never be used again and that is a loss to the country and a tragedy for the families involved.

Using unemployed resources that we have now in a productive manner, rather than leaving them idle for some uncertain use in some uncertain time in the future, is an act of rationality. Their use in rehabilitating and expanding the stock of public goods will add to productivity and the savings generated from that will make more capital available for private firms in the future.

The difference between governmental mistakes and private sector mistakes is the reason to emphasize the former: People in government are spending other people's money on yet other people in pursuit of various ends (sometimes re-election, sometimes "empire" expansion, etc.). This process is by its nature more fraught with inefficiency than private action.

About "free lunches" I do not think I am mistaken; if you think I am wrong I suggest that you try wishing for manna to appear and report back if you are successful. I won't hold my breath.

You are quite right that spending other people’s money is fraught with inefficiency, but the private sector is not exempt in that regard. Moral hazard is integral to many private sector decisions and, as we see as a result of the bail-out programs, we the taxpayers are paying the price. No sector is exempt from irresponsible behavior.

As for free lunches, expanding public goods in a recession is freer than you think. You ignore unemployment compensation, food stamps, health care, and the bail-out of banks that extended loans to firms that had to shut down because of a lack of opportunities, as well as the myriad of other social programs provided by both government and private sector charities. Those costs are eliminated by putting the resources to work expanding public goods.

You have a naïve belief in the efficacy of the private sector. Remember the Biblical injunction not to find the speck in the eye of someone else (government) without first removing the log from one’s own eye (private sector).

Its not just people spending other people's money, its people spending other people's money on still other people. You seem given to understating the inefficiency of governmental control.

I'm glad you aren't insisting that there is a free lunch, there isn't generally: we can call manna a once in history exception.

I have no dellusions that private control is not a perfectly effficient method of resource allocation. I have no idea why you suggest that I have a naive belief in private control. But since you jumped to that conclusion, without cause, I will remind you of Hayek's dicusssion of the "fatal conceit" of most governmental planners who fail to understand that information is costly and that dispersed decisionmaking taps into much more information than central planners possibley can. I hope that you are not so conceited, but I'm not sure at this point in the conversation.

Beautiful!

Why is an export job better? It is better if a bigger market or more markets is the result and you believe more markets benefit more consumers.

The Ex-Im Bank not only LENDS to U.S. Exporters but also to foreign firms and governments. The Burma Road in China was one of the first loans made as well as the Pan American Highway. European countries were lent 2 billion dollars in 1946 as a prelude to the Marshall Plan.

There are totalitarian countries where U.S. exporters are obviously at a disadvantage "competing" against government owned enterprises so the possibility of loans to finance market openings is crucial.

Opening markets for goods, services and currencies benefits producers initially but ultimately consumers in all the markets.

The celebrated Daniel Kuehn can elaborate on this far better than I can, but the hitch when it comes to exports is that their primacy in an economy is a form of the discredited economic model of mercantilism. Right?

Why ban exports? Trade between economies is a summation of trade in markets between economies. The exports of the mercantilist should be discredited but not exports in general. Trade between economies is a result of exports and imports thus, markets are created that benefit consumers.

Mr Boudreaux these are interesting questions. My own degree in economics is extremely weak but there is one thing that has always bugged me: why is it that farm produce is used for export purposes first, thus raising the price of goods and services due to the scarcity of supply?

To give an example: Australia is a major producer of sheep and cattle. Over a period spanning 35 years the price of lamb has gone up and up and up, such that lamb is no longer an affordable every day commodity. Instead of supplying the domestic market, the lamb is placed on the overseas export market, as live sheep. This live sheep export hurts jobs here in Australia, as well as taking away produce from the domestic market.

In that same 35 years we have seen a decline in a lot of the industries that were our backbone - steel, other forms of farm production, other minerals. A lot of jobs in our traditional industries such as in manufacturing have disappeared, and gone over seas.

The thing is: a lot of the industries have disappeared as tariffs have disappeared. The cost of importing many items was drastically reduced meaning that the domestic market could not compete. One reason for this lack of competition appears to be due to the labour market where the price of labour is kept artificially high due to union influence, or even due to the introduction of better and more efficient techniques for production.

I believe you're only looking at half the equation.

Imagine that for whatever reason, sheep only lived in Australia. If Australia banned the export of sheep (or made it pricey enough through tariffs), then yes, Australians would get to enjoy all the sheep.

However, by allowing sheep to be exported, now the rest of the planet can also enjoy sheep. Can this raise the price of sheep? Of course. But Australia as a whole isn't losing out: they are getting paid for the sheep that have been purchased. With the price of sheep going up, they're getting paid even more. So Australians get more money, and the rest of the world can enjoy the sheep for their wool and deliciousness.

That additional money earned by Australians isn't burned in effigy either. It's used to purchase additional goods from the outside, such as the computer you are typing your reply from, or the iPod that plays your music, or the car that gets you around.

Without the sheep export, you may be able to enjoy more sheep, but you'd have to endure with fewer other goods.

Additionally, sheep isn't put up for "export first", whatever that means. Same for any other good produced. If you have a business, apart from shipping costs, do you care where the person who buys your product lives? If someone pays more for your sheep, is it a surprise that you would prefer to sell him your goods compared to someone who pays you less?

You can apply the same analysis to any other industry.

There aren't many jobs left in the textile industry either (certainly as a proportion of the total population). We're all much richer for that.

Jobs are a cost, not a benefit.