The Warrior and the Ogre Learn About Liberty and Property.Read More
A Comic Book Lesson in Capital AccumulationRead More
"And that, my dear Odysseus is civilization: the division of labor, wealth, peace, and even…”
“Don’t say it!”
“Why raid, when you could trade?”
“T…. t… trade?”Read More
“I feel so different. I was so scared before. I'm still worried about running out of food. But it's not as bad anymore. I know at least I’ll survive a while longer.”Read More
“You have struck your head and cannot think clearly. I must teach you how to think about action, so you can better act."Read More
Dan Sanchez interviews Robert Murphy to discuss his online introductory economics course.Read More
How the free market benefits workers, and how government intervention hurts them, is an important lesson indeed.
But to get the full picture of the virtues of the free market and the evils of interventionism, it is essential to bring the consumer into the picture.Read More
While, after the advent of modern value theory, most economists accepted that valuation is not objective, and thus not cardinal, they just could not let go of cardinality altogether. Cardinality is necessary for the use of measurement and mathematics, and according to the prejudice of many thinkers, "science is measurement."
Is money not absurd? Daily we give up perfectly useful goods and services for the sake of little green pieces of paper.
But it is not just the fiat paper money we are familiar with that can seem strange in this regard. Even commodity money can seem weird when you think about it.Read More
The great Austrian economist Eugen von Böhm-Bawerk considered the supply-and-demand formulation as all well and good, but he discovered that prices are determined more directly by something else.
In any given market for a good, there will always be four people whose valuations put them in a special position. Böhm-Bawerk called these four people the "marginal pairs." It is these marginal pairs that directly determine prices.Read More
However, you can't have your cake and eat it too. And neither can you have your corn as ethanol and eat it as Corn Flakes too. As the rapping Hayek says, eventually the "grasping for resources reveals there's too few," (this revelation comes in the form of business losses) and resources are reallocated accordingly. Austrians say this reallocation period is the painful, but ultimately salutary, cyclical economic "bust" that inevitably follows the boom.
"Notice the difference between the above presentations of marginal utility and Mises's presentation of the concept. Mises treats of utility in a formal, praxeological sense: "Importance attached to a thing on account of the belief that it can remove uneasiness." In contrast, the passages above give a sensuous, psychological connotation: they treat of the satiation of hunger, or the sensuous enjoyment of taste.
Also, diminishing marginal utility is presented as an empirically discovered regularity that is the result of certain empirically discovered facts of human physiology and behavior. The diminishing marginal utility of hamburgers is due to the physiological/psychological facts that people get full and that people grow weary of tastes. And this regularity is sometimes present, sometimes not (which is probably why it is called a "principle" in the first excerpt and not a "law")."Read More
And there are the Keynesian and other under-consumptionist fallacies, which, at bottom, are just as absurd as thinking that Crusoe could become richer in consumers' goods by consuming more in order to stimulate his own production. There is a great deal that Mr. Crusoe could teach Mr. Krugman, if the arch-Keynesian would only deign to spend some quality time with him.
As the great Frederic Bastiat wrote, "How happy will nations be when they see clearly how and why what we find false and what we find true of man in isolation continue to be false or true of man in society!"
"The most important "mental equipment" for thinking about mankind is the "category of teleology/action": our inbuilt conception of purpose and purposeful behavior. Action (purposeful behavior) is the use of means to seek an end (the "end" always being "the relief from a felt uneasiness").
Just as the natural world would be a meaningless jumble of sensations without the category of causality, the social world around us (as well as our understanding of our own states of mind) would be a meaningless jumble of sensations if we were not equipped with the category of teleology/action. The conception of action in general is necessarily prior to the cognition of any particular action.
Gestures and words would be meaningless motions and sounds unless the mind were able to apply the conception of "purpose" to them. And how could you explain "purpose" to someone who did not already have an inbuilt conception of it, when such an explanation would be, to your "student," meaningless motions and sounds?
If I know anything, I know what action is. With every sentence I write with the purpose of communicating to you, the reader, I live it. And if you are looking at these words with the purpose of understanding them, you, too, are living it. Should I try to deny the reality of purpose, means and ends, I would find myself caught in the manifest absurdity of trying to deny the reality of trying."Read More
The phenomenon of interest occurs because of the simple fact that, other things being equal, people prefer satisfaction sooner rather than later. This universal feature of acting man is called "time preference." Time preference can even be seen in the behavior of children, as in the seminal "marshmallow experiment" conducted at Stanford University.Read More