Can you know the whole by observing the part? If you are grasping the whole by the part, then you're not observing the part indeed: you're observing the whole from a specific viewpoint. As long as a viewpoint necessarily leads to another viewpoint, you're grasping the whole.
A true part doesn't allow to know the other parts. It is necessary but not sufficient to know the whole. However the part conveys some information about the whole which can be classified in two categories: one, definite but limited knowledge about the whole; two, reduction of the possible true assertions which can be given about the whole, or which is the same, some information about what the whole is not.
Saturday, December 29, 2012
Friday, December 28, 2012
An explicit bet
The Fed members seemed to agree that unemployment was to high and that they were ready to concede a slightly higher inflation in order to reduce the unemployment rate.
This is how on its December FOMC statement, the Fed decided to undertake a monetary policy which basically increases the quantity of money in the economy. The goal was that more money means more credit and more general activity and, at the end, more employment (less unemployment) and production, even if recognizing a cost through more inflation. But the Fed is more explicit: the statement asserts that a reduction on the unemployment rate is going to be pursued as long as inflation doesn't reach 2.5%
The Phillips curve is a supposed relation between unemployment and inflation. What is the shape of that curve at any point in time? What does it shift (changes the shift) of that curve? Those are empirical questions over which economists have debated for years.
With their very explicit, quantitatively measurable policy, what the Fed members are telling amounts to bet that the Phillips curve has a specific shape, a shape such that lays under the point {unemployment: 7.7, inflation 1.6}. This is so, because only such a curve (drawn as the green curve in the graph), allows to reach an unemployment rate of 6.5% or less before reaching an inflation of 2.5% or more.
However, if the Phillips curve lays over the point {unemployment: 7.7, inflation 1.6}, i. e. if the Phillips curve has a shape as that of the blue curve on the graph, then the Fed is going to reach the 2.5% inflation milestone before reducing unemployment under 6.5%, being therefore unable to reach the undartaken goal of having an unemployment of 6.5% or less with an inflation of 2.5% or less.
Next months and years are going to be really interesting in matching reality against the Fed view on the Phillips curve, is going to be a rarely good contribution to the empirical debate, and is going to give a very clear case study to economics teachers.
Green or blue? Make your bet!
Saturday, December 22, 2012
Mean means: true versus merely apparent economics
Explanation of economic phenomena is rarely an end in itself, some times a means for technological ends, and near to always a pretext to deceive others and oneself.
Wednesday, December 19, 2012
A praxeological modelling of government
Every right is exclusive: it aims to exclude all others from commanding that over what the right is invested.
A right is only meaningful when there are means, available (included being to the knowledge of) to the right owner, to successfully defend it against any other attempt to violate it.
A rules structure is any list of all not conflicting rights.
Conflict comes from the confronting of two or more different rules structures.
Conflict is a case of absence of cooperation (the only other case of absence of cooperation being autarky).
The set of actions, either by one agents or by more, aimed to defend a rules structure, i. .e. to attack any other rules structure, conforms a government.
A government is, by definition, in conflict (i. e. in war) with any other government.
Two apparent governments which are in no conflict whatsoever, i. e. which defend the same rules structure, are not two governments but two parts of one same government.
One apparent same government which changes a rules structure, i. e. which enters into conflict with a previously defended rules structure at least in some part, it is not the same government than before but other government, therefore an enemy of the former, even if it is composed by the same people, and governs in the same place than the former. A change in the rules structure is, in kind and regardless of magnitude, akin to a coup d'état.
The apparent "meta-right" of having the right to change other rights amounts to the effective non-existence of those other rights. As long as some have the effective power to change others' rights, the others don't have rights but only the some.
A right is only meaningful when there are means, available (included being to the knowledge of) to the right owner, to successfully defend it against any other attempt to violate it.
A rules structure is any list of all not conflicting rights.
Conflict comes from the confronting of two or more different rules structures.
Conflict is a case of absence of cooperation (the only other case of absence of cooperation being autarky).
The set of actions, either by one agents or by more, aimed to defend a rules structure, i. .e. to attack any other rules structure, conforms a government.
A government is, by definition, in conflict (i. e. in war) with any other government.
Two apparent governments which are in no conflict whatsoever, i. e. which defend the same rules structure, are not two governments but two parts of one same government.
One apparent same government which changes a rules structure, i. e. which enters into conflict with a previously defended rules structure at least in some part, it is not the same government than before but other government, therefore an enemy of the former, even if it is composed by the same people, and governs in the same place than the former. A change in the rules structure is, in kind and regardless of magnitude, akin to a coup d'état.
The apparent "meta-right" of having the right to change other rights amounts to the effective non-existence of those other rights. As long as some have the effective power to change others' rights, the others don't have rights but only the some.
Sunday, December 9, 2012
Government, Inc.
Wouldn't be better if government ownership were embodied on stock? After all, elections are already driven by little more than financial power.
Monday, November 19, 2012
Capitalandbor
The difference between capital and land is that capital is a produced input. What is, I ask, the economic relevance whatsoever that an input is previously produced or unproduced? Also, what's the economic relevance of distinguishing between labor, input humanly embodied, and not humanly embodied inputs? Is a worker produced or unproduced or a mix of both, and does this have any economic relevance whatsoever?
Inputs classification among land, capital, and labor obeys to an interest in political science corresponding to the England of the Industrial Revolution, but since the viewpoint of modern economic theory, that classification is absolutely irrelevant if not actually damaging to the development of the theory.
If any, a distinction between debt and equity would be less useless.
Inputs classification among land, capital, and labor obeys to an interest in political science corresponding to the England of the Industrial Revolution, but since the viewpoint of modern economic theory, that classification is absolutely irrelevant if not actually damaging to the development of the theory.
If any, a distinction between debt and equity would be less useless.
Sunday, November 18, 2012
Alchemy economics
Chartism (euphemistically, technical "analysis") is alchemy economics in three senses:
1) it pursues golden correct price forecasts,
2) it ultimately doesn't achieve it,
3) it eventually brings closer the understanding of true economic science.
1) it pursues golden correct price forecasts,
2) it ultimately doesn't achieve it,
3) it eventually brings closer the understanding of true economic science.
Thursday, November 15, 2012
A manifesto on general epistemology
1. Everything in the physical universe is deterministic, i. e. caused, i. e. related to the rest of the physical universe.
2. Knowing all the causes, the effect is necessarily known.
3. Not knowing all the causes, possible causes are tried (tested). This is basically an heuristic process.
4. What is a cause is a different question of how is that a cause interact so as to provoke an effect. Determining what is a cause is forecasting. Determining how is that a cause interact is explaining.
5. Not knowing the total logic of a cause-effect relation, i. e. not being able to fully explain a cause-effect relation (including but not limited to not being able to fully forecast the full list of causes which provoke an effect), possible causes are tried (tested). This process of finding provisional hypothesis is basically an heuristic process.
6. An heuristic theory cannot be accepted, i. e. cannot be taken as a complete explanation of some effect. An heuristic theory can only be failed to be rejected in the sense of being unable to find an obvious contradiction. It takes only an asserted contradiction to reject an heuristic hypothesis.
7. A heuristic theory calls for statistic inferential tests as the process to determine its definite rejection or its everlasting provisional failure to reject it.
8. An explanation is a logical structure which if free from logical errors cannot be contradicted by reality. Due to the complex nature of the reality far beyond of human ability to explain (or the totality of reality is explained or not), explanations are only mental logical structurizations.
9. A structure or model is a logical structurization in which the effects are fully explainable through the causes.
10. A model can only be proved wrong through finding a logical error. It can never be proved wrong through empirical testing.
11. In the aim of reality only particular explanations are possible. The study of reality is always the study of concrete episodes, it is history.
12. A model can be used to advance an understanding of an empirical, i. e. historical or real, phenomenon even if the full exhaustive explanation of reality is impossible.
13. An exhaustive explanation of reality would be an explanation of all reality, through all times and all spaces. It would include, but wouldn't be limited to, the reduction of mental phenomena to physical phenomena. Given that the very cerebral process which would aspire to such an explanation would of need require physical changes in the process of explaining, that would create a loop to eternal development of explanation which, under the physical limitations of human nature are not just technological but logically impossible.
14. In order to use a model to advance the understanding of specific aspects of reality, an identification of the model's concepts with heuristically defined aspects of reality must to be achieved. An example in economics would be the identification of the concept of agent with a specific human being, for instance. The question of whether a regular adult, or child, or an idiot, or a baby, or the most intelligent animal in the world, or a regular dog, or a mouse, or a roach, or a bacteria, or a molecule, or a plant, or a piece of wood, or a chair, or an office, or a factory or the state, or a religion, or the universe is an agent or not, is at the end an heuristic decision whose appropriateness depends, in science, of its power to advance understanding, whose appropriateness in advance, depends, in technology, of its power to allow the assembly of inventions which work.
2. Knowing all the causes, the effect is necessarily known.
3. Not knowing all the causes, possible causes are tried (tested). This is basically an heuristic process.
4. What is a cause is a different question of how is that a cause interact so as to provoke an effect. Determining what is a cause is forecasting. Determining how is that a cause interact is explaining.
5. Not knowing the total logic of a cause-effect relation, i. e. not being able to fully explain a cause-effect relation (including but not limited to not being able to fully forecast the full list of causes which provoke an effect), possible causes are tried (tested). This process of finding provisional hypothesis is basically an heuristic process.
6. An heuristic theory cannot be accepted, i. e. cannot be taken as a complete explanation of some effect. An heuristic theory can only be failed to be rejected in the sense of being unable to find an obvious contradiction. It takes only an asserted contradiction to reject an heuristic hypothesis.
7. A heuristic theory calls for statistic inferential tests as the process to determine its definite rejection or its everlasting provisional failure to reject it.
8. An explanation is a logical structure which if free from logical errors cannot be contradicted by reality. Due to the complex nature of the reality far beyond of human ability to explain (or the totality of reality is explained or not), explanations are only mental logical structurizations.
9. A structure or model is a logical structurization in which the effects are fully explainable through the causes.
10. A model can only be proved wrong through finding a logical error. It can never be proved wrong through empirical testing.
11. In the aim of reality only particular explanations are possible. The study of reality is always the study of concrete episodes, it is history.
12. A model can be used to advance an understanding of an empirical, i. e. historical or real, phenomenon even if the full exhaustive explanation of reality is impossible.
13. An exhaustive explanation of reality would be an explanation of all reality, through all times and all spaces. It would include, but wouldn't be limited to, the reduction of mental phenomena to physical phenomena. Given that the very cerebral process which would aspire to such an explanation would of need require physical changes in the process of explaining, that would create a loop to eternal development of explanation which, under the physical limitations of human nature are not just technological but logically impossible.
14. In order to use a model to advance the understanding of specific aspects of reality, an identification of the model's concepts with heuristically defined aspects of reality must to be achieved. An example in economics would be the identification of the concept of agent with a specific human being, for instance. The question of whether a regular adult, or child, or an idiot, or a baby, or the most intelligent animal in the world, or a regular dog, or a mouse, or a roach, or a bacteria, or a molecule, or a plant, or a piece of wood, or a chair, or an office, or a factory or the state, or a religion, or the universe is an agent or not, is at the end an heuristic decision whose appropriateness depends, in science, of its power to advance understanding, whose appropriateness in advance, depends, in technology, of its power to allow the assembly of inventions which work.
Wednesday, October 17, 2012
Blackmail law
If
1) an agent A believes that other agent B has command over what A considers a good i,
2) A prefers i to other good j,
3) A has command over j, and
4) B knows 1) and 3),
then
B has command over j.
1) an agent A believes that other agent B has command over what A considers a good i,
2) A prefers i to other good j,
3) A has command over j, and
4) B knows 1) and 3),
then
B has command over j.
Wednesday, September 12, 2012
Sexual education
Good sexual education is learning how to discipline the body so as to pursue long-term happiness.
Bad sexual education is about how dealing with an uncontrolled body, it's about damage control.
Worst sexual education is misleading the body towards depravity, a.k.a. soul slaving by a body gone mad. It's the opposite of sexual freedom.
Good sexual education is learning about the meaningful role of sex in human fulfillment of happiness. It's about love.
Shallow sexual education is learning about body parts and bodily functions which are anyway written in instinct.
Good sexual education is about duty rather than pleasure, which paradoxically leads to pleasure.
Bad sexual education is about pleasure rather than duty, which paradoxically leads away from enduring pleasure.
Good sexual education is about using sex in pursuit of happiness.
Bad sexual education leads to sacrificing happiness to void sex.
Good sexual education leads towards enjoying sex.
Bad sexual education leads towards suffering sex, towards sex as a vice.
Good sexual education is about love for others.
Bad sexual education is about selfishness.
Bad sexual education is about not being an adolescent mother. It gives ideas about postponing which "make sense" far beyond adolescence.
Good sexual education is about not being a single mother. It gives ideas about how to start a family.
Good sexual education is about children, and becoming parent as a means. It's about giving.
Bad sexual education is about the selfish pleasure of parenting using the child as a means. It's about asking. It's about human pets.
Good sexual education is about lifetime compromise. It's about matrimony.
Bad sexual education is about good-while-rendering. It's about a civil contract useful when the expected breakup arrives. It's about planning divorce. It's cynical.
Good sexual education is about human dignity, about what makes our bodies sacred, about respecting ourselves.
Bad sexual education is about how to put on a condom as to avoid chlamydia.
Bad sexual education is about statistics.
Good sexual education is about not judging the neighbor and custody of the own eyes.
Good sexual education leads to being a good person.
Bad sexual education leads to being a bad person.
Good sexual education is about highlighting that the most natural thing is for sex to be considered taboo; this is, something which is not irreverently talked about but something intimate, special.
Bad sexual education aims at eliminating the taboo character of sex, turning it into base, mean, and coarse. That's why sexual explicitness is everywhere attached to bad manners and lack of education.
Bad sexual education is about learning to use condoms.
Good sexual education about learning not to use porn.
Bad sexual education is about looking for pleasure.
Good sexual education is about running away from danger and pain.
Bad sexual education is about how dealing with an uncontrolled body, it's about damage control.
Worst sexual education is misleading the body towards depravity, a.k.a. soul slaving by a body gone mad. It's the opposite of sexual freedom.
Good sexual education is learning about the meaningful role of sex in human fulfillment of happiness. It's about love.
Shallow sexual education is learning about body parts and bodily functions which are anyway written in instinct.
Good sexual education is about duty rather than pleasure, which paradoxically leads to pleasure.
Bad sexual education is about pleasure rather than duty, which paradoxically leads away from enduring pleasure.
Good sexual education is about using sex in pursuit of happiness.
Bad sexual education leads to sacrificing happiness to void sex.
Good sexual education leads towards enjoying sex.
Bad sexual education leads towards suffering sex, towards sex as a vice.
Good sexual education is about love for others.
Bad sexual education is about selfishness.
Bad sexual education is about not being an adolescent mother. It gives ideas about postponing which "make sense" far beyond adolescence.
Good sexual education is about not being a single mother. It gives ideas about how to start a family.
Good sexual education is about children, and becoming parent as a means. It's about giving.
Bad sexual education is about the selfish pleasure of parenting using the child as a means. It's about asking. It's about human pets.
Good sexual education is about lifetime compromise. It's about matrimony.
Bad sexual education is about good-while-rendering. It's about a civil contract useful when the expected breakup arrives. It's about planning divorce. It's cynical.
Good sexual education is about human dignity, about what makes our bodies sacred, about respecting ourselves.
Bad sexual education is about how to put on a condom as to avoid chlamydia.
Bad sexual education is about statistics.
Good sexual education is about not judging the neighbor and custody of the own eyes.
Good sexual education leads to being a good person.
Bad sexual education leads to being a bad person.
Good sexual education is about highlighting that the most natural thing is for sex to be considered taboo; this is, something which is not irreverently talked about but something intimate, special.
Bad sexual education aims at eliminating the taboo character of sex, turning it into base, mean, and coarse. That's why sexual explicitness is everywhere attached to bad manners and lack of education.
Bad sexual education is about learning to use condoms.
Good sexual education about learning not to use porn.
Bad sexual education is about looking for pleasure.
Good sexual education is about running away from danger and pain.
Saturday, September 8, 2012
Obama seen from the eyes of a Latin American
Obama is the President of the United States and, still more important an America citizen. Plus, he seems a very intelligent individual. Nevertheless, Obama can't help being Third World minded and having a decisive non-American background. I don't know how easy is for Americans seeing this, but being myself born in the Third World, living in it, and breathing everyday its deepest short-term sight, its envious desire to abuse the property of others, and its, and its sly lack of respect for values and tradition, I can tell you Americans, from the deepest of my heart, that Obama is a typical Underdeveloped World's leader.
Obama represents that why people abandon Latin America. It is the opposite force to the magic attraction and fascination caused by the Statue of Liberty to those who want to be owners of themselves. Being infatuated with Obama's promises is a symptom of cowardice, of fear of freedom.
Do you want less unemployment? Piece of cake! Reduce the artificial rigidities on labor market; correct incentives on actual workers, unemployed people, and employers.
Do you appreciate the old day's glory when America was seen as the light enlightening the world trough path of development? Embrace authentic freedom again!
May not the American Dream die. It's in the interest of the whole world. May not the Americans buy the siren's sweet, deadly song.
Obama represents that why people abandon Latin America. It is the opposite force to the magic attraction and fascination caused by the Statue of Liberty to those who want to be owners of themselves. Being infatuated with Obama's promises is a symptom of cowardice, of fear of freedom.
Do you want less unemployment? Piece of cake! Reduce the artificial rigidities on labor market; correct incentives on actual workers, unemployed people, and employers.
Do you appreciate the old day's glory when America was seen as the light enlightening the world trough path of development? Embrace authentic freedom again!
May not the American Dream die. It's in the interest of the whole world. May not the Americans buy the siren's sweet, deadly song.
Saturday, September 1, 2012
Verbs
The Diary of a Nonnative English Speaker: I like the easy way in which you just can verb any word in English but I have problems with phrasing together or phrasing up or whatever it must be told out or written down.
Sunday, August 26, 2012
On the production function
Technology is the known recipes to produce output out of inputs. A production function is a relation between quantities of output and respective quantities of inputs required to produce such quantities given the technology.
With perfect knowledge about the list of inputs, the only logical conclusion is that there can be no more that constant returns to scale. With constant returns to scale there cannot be increasing marginal returns.
So, the apparent phenomena of non-constant returns to scale and increasing marginal returns are logically due exclusively to ignorance about the list of inputs required to produce.
With perfect knowledge about the list of inputs, the only logical conclusion is that there can be no more that constant returns to scale. With constant returns to scale there cannot be increasing marginal returns.
So, the apparent phenomena of non-constant returns to scale and increasing marginal returns are logically due exclusively to ignorance about the list of inputs required to produce.
Sunday, August 19, 2012
Kinds of returns to scale: constant. That's all.
Forget about maths disentangled of economic theory. Even if you can have a mathematical function of degree different than zero, in economics there are just constant returns to scale. If you have the appearance of decreasing returns to scale, that's because an input remains fixed after all. The same is true in the case of apparent increasing returns to scale, save by the fact that in this second case, production is still in the stage of increasing marginal returns.
Wednesday, August 15, 2012
Lie sold as truth
Some "economists" (lobbyists in scientific disguise) dedicate their work not to clarify truth but to elaborate lie so that, through unnecessary complication of explanations, it becomes harder to understand the phenomenon in consideration on the one hand, and lie acquires the venerable appearance of truth on the other.
Saturday, August 4, 2012
Respect for the public authority
Holding the hand of the public authority in your own hands and then kissing it... The whole idea is avoiding that he can move it.
Sunday, July 22, 2012
A proposal for market-led higher education
A proposal for several distinct but related industries, in principle decentralized:
Teaching proper. The teacher would produce content for the courses and pedagogical ways of teaching. He would design syllabi, choose books if any, would arrange exercises as teaching tools, and would choose the number of classes to teach per week. The business model would consist in announcing the course, gain prestige, and charge students which attend the course, although of course class tasting could occur. Alternatively or supplementally, a patron could sponsor fully or partially a chair, so that would-be teachers could compete for that chair (maybe through ways arranged by the sponsor himself). For a new, innovative course or a new teacher, some sort of angel investment or joint venture could be advisable. Indeed, the teaching industry could be split between pure teaching and course design, although the common knowledge required would probably imply at least a moderate vertical integration among these two industries.
Curriculum. Specialized companies would work making research among potential employers of professionals on the one hand and offered courses (and the course design industry) on the other, so as to create a list of courses (a curriculum) ideal for distinct employers. These "curriculum companies" could also analyze which curricula are more demanded in the market, which are fashion and which ones outdated. They could also have statistics of how much students are enrolled under (at least stated) curricula. Employers could pay for the curriculum company to design curricula tailored at different levels for such employers or otherwise to know fashionable or otherwise successful curricula given market demand. They could even know potential supply of such curricula currently and for the foreseeable future. Curriculum companies could also sell advise services to new students so as for these to know the best prospects of curriculum ranked by employability or other variable.
Certification. Besides the mere course attendance, students could buy the service of course-attendance certification. They could also buy the service of course evaluation. This would create a specialized industry of individual course certification as well as of complete curriculum accomplishment.
This decentralization of the different industries which make higher education, would create competition among the different parts of higher education so that the student can get the best of each. It would also create room for innovation (for instance in course or curriculum designing) which, however, if failing, wouldn't attempt against the whole process of higher education. It would also create a closer relation between higher education programs and employers requirements. It would allow for smooth evolution of career curricula. Last but not least, it would allow that compromised professionals could deep and update their higher education as much as they want. Market has proved more effective than central planning in virtually every human activity. Higher education seems to be not the exception.
Thursday, July 19, 2012
(In)tolerance
The plea for "tolerance" is often no more than the first stage of a malicious ideology in trying to crush and ultimately ban the establishment. "Tolerance" is a favorite marketing strategy to immunize from criticism what has been previously seen as evil by turning such criticism into politically incorrect. The plea for "tolerance" is frequently disguised intolerance against traditional values, a killer crying for mercy while committing his crime.
Sunday, July 15, 2012
A proposal for a Bachelor's degree program in economics
I SEMESTER:
Math I: differential calculus
Statistics I: descriptive
General Epistemology
Introduction to Praxeology: introductory chapters of "Human Action" and spontaneous order ("I Pencil")
II SEMESTER:
Math II: integral calculus
Statistics II: inferencial
Methodology of Economics (Friedman's "Methodology of Positive Economics" and more)
Finance I (core of CFA I)
III SEMESTER:
Math III: linear algebra
Statistics III: inferential
Microeconomics I: Demand theory
Monetary Theory: theory of value of money
IV SEMESTER:
Math IV: differential equations, recurrence relations, topology
Econometrics I
Microeconomics II: Production theory
Macroeconomics I
V SEMESTER:
Econometrics II
Finance II (core of CFA II)
Macroeconomics II
Microeconomics III: industrial organization
VI SEMESTER:
Econometrics III
Finance III (core of CFA III)
Macroeconomics III
Game Theory (all Gibbons's book)
VII SEMESTER:
Public finance (Musgrave's and Musgrave's book)
International Trade (first two parts of Krugman's book)
History of economics (Blaug's book)
Auctions (theory and experiments)
VIII SEMESTER:
Public choice
International finance (second half of Krugman's book)
Economic historiography (methods of economic history)
Development economics (emphasis on Bauer, Easterly, etc.)
All the courses would belong to one of four departments:
* Department of Mathematics and Statistics
* Department of Microeconomics
* Department of Macroeconomics
* Department of Methodology and History
Math I: differential calculus
Statistics I: descriptive
General Epistemology
Introduction to Praxeology: introductory chapters of "Human Action" and spontaneous order ("I Pencil")
II SEMESTER:
Math II: integral calculus
Statistics II: inferencial
Methodology of Economics (Friedman's "Methodology of Positive Economics" and more)
Finance I (core of CFA I)
III SEMESTER:
Math III: linear algebra
Statistics III: inferential
Microeconomics I: Demand theory
Monetary Theory: theory of value of money
IV SEMESTER:
Math IV: differential equations, recurrence relations, topology
Econometrics I
Microeconomics II: Production theory
Macroeconomics I
V SEMESTER:
Econometrics II
Finance II (core of CFA II)
Macroeconomics II
Microeconomics III: industrial organization
VI SEMESTER:
Econometrics III
Finance III (core of CFA III)
Macroeconomics III
Game Theory (all Gibbons's book)
VII SEMESTER:
Public finance (Musgrave's and Musgrave's book)
International Trade (first two parts of Krugman's book)
History of economics (Blaug's book)
Auctions (theory and experiments)
VIII SEMESTER:
Public choice
International finance (second half of Krugman's book)
Economic historiography (methods of economic history)
Development economics (emphasis on Bauer, Easterly, etc.)
All the courses would belong to one of four departments:
* Department of Mathematics and Statistics
* Department of Microeconomics
* Department of Macroeconomics
* Department of Methodology and History
Saturday, July 14, 2012
Krugman economics
If some agent has been stealing from another and a policy of avoiding stealing is imposed, the robber losses. So, by worsening some agents, such a policy is not unambiguously good for the economy and maybe it should even be avoided.
This is how I interpret Krugman economics from his book on international trade. Some agents "lose" because they are not allowed anymore to benefit, say, from protectionism (until here, we agree), so a trade liberalization is not unambiguously good for the economy (with which I disagree). Plus, how is that trade liberalization should be undertaken if no (necessarily artificial) protectionism had been imposed before in the first place?
This is how I interpret Krugman economics from his book on international trade. Some agents "lose" because they are not allowed anymore to benefit, say, from protectionism (until here, we agree), so a trade liberalization is not unambiguously good for the economy (with which I disagree). Plus, how is that trade liberalization should be undertaken if no (necessarily artificial) protectionism had been imposed before in the first place?
Sunday, July 8, 2012
Against a labor theory of value
The demand for a good of higher order cannot change save by a change in the price of some good of lower order which it helps to produce.
Church and freedom
The Catholic Church needs the help of people who truly believe in and are students of freedom for her to understand her limits on political proposals, her best way to fight poverty, and her development of a theology of free will harmonious with economic and political sciences and the rule of law.
People who truly believe in and are students of freedom can benefit from the Catholic Church, so that they remain humanitarian and full of charity, understand that free will and respect of free will is not the same than selfishness or disdain, but that true respect of freedom must be close to love for the neighbor.
Love of freedom and fear of God share major features: realizing that one is not almighty and cannot rule over whatever caprice one can have, to trust in powers which are beyond our full comprehension but which we revere by acknowledging that they operate for our ultimate benefit.
Freedom and fear of God are not just compatible but ultimately of mutual necessity as well as totalitarianism and atheism are at the end both sides of one same coin.
There cannot be God without freedom and there cannot be freedom without God. Both Church and classical liberals must understand that or scorn it at their own peril. It is civilization and that which we regard distinctively human which is at stake.
People who truly believe in and are students of freedom can benefit from the Catholic Church, so that they remain humanitarian and full of charity, understand that free will and respect of free will is not the same than selfishness or disdain, but that true respect of freedom must be close to love for the neighbor.
Love of freedom and fear of God share major features: realizing that one is not almighty and cannot rule over whatever caprice one can have, to trust in powers which are beyond our full comprehension but which we revere by acknowledging that they operate for our ultimate benefit.
Freedom and fear of God are not just compatible but ultimately of mutual necessity as well as totalitarianism and atheism are at the end both sides of one same coin.
There cannot be God without freedom and there cannot be freedom without God. Both Church and classical liberals must understand that or scorn it at their own peril. It is civilization and that which we regard distinctively human which is at stake.
Thursday, July 5, 2012
So wrong, Mr. Varian
"Transitivity is a hypothesis about people's choice behavior, not a statement of pure logic." Intermediate Microeconomics, 8/e, page 36.
Tuesday, July 3, 2012
Self-consciousness on methodology
"More than other scientists, social scientists need to be self-conscious about their methodology."
Milton Friedman, "The Methodology of Positive Economics"
Milton Friedman, "The Methodology of Positive Economics"
Sunday, June 24, 2012
Externality = violation of a property right = coercion = the opposite of freedom = anchor to underdevelopment
I mean, if somebody is smoking in the park and I'm reading there and I don't like the smoke, such as Coase shows, the externality is not merely a matter of the smoker causing a damage to me (Pigou's naïveté). Damage is not a sufficient condition to have a (negative) externality. If and only if a violation of a property right occurs, have we an externality. The other way of seeing an externality, i. e. the need to internalize, consists precisely in the need to put a stop to such a violation of the property right, to such a coercion. Externalities can be defined only in the context of a register of property rights, since they are precisely violations to such a register. On the other hand, even in a completely internalized society where there would be no externalities at all, we could have damages and benefits perceived by some agents by the actions of other agents. The feature of those damages and benefits, however, would be so, in such a system, that our damaged or benefited agents would no have any right whatsoever over putting a stop to the damages or continue enjoying the benefits happening by the actions of other agents, which we re are assuming to be the proprietors of the things causing damages and profits to other agents in our example.
And linking the concept of coercion to the work of Friedrich Hayek in his "The Constitution of Liberty", in which he defines freedom as "that condition of men in which coercion of some by others is reduced as much as is possible in society" (page 11). This is, freedom is the absence of coercion. Coercion is the opposite of freedom. Whereas there is freedom there's no coercion, whereas there's coercion there's not freedom.
This is important, for instance, to understand the key feature by which we can tell a society in which the development advances at a reasonable pace from one in which that reasonable pace is not present. Anyone who has lived in an underdeveloped (*) country bears witness that externalities are a key feature of those countries either because a property register existing it is violated (corruption, blackmail, theft, and a regrettable etcetera) or because there is not such a register in the first place (on which the work by Hernando de Soto is particularly illustrative).
(*) In order to emphasize backwardness, but euphemistically called sometimes "developing" as if full stagnation would be possible and as trying to convey basically the opposite idea of what really happens in countries composed of mostly poor people under world standards, i. e. almost absence of a developing pace.
And linking the concept of coercion to the work of Friedrich Hayek in his "The Constitution of Liberty", in which he defines freedom as "that condition of men in which coercion of some by others is reduced as much as is possible in society" (page 11). This is, freedom is the absence of coercion. Coercion is the opposite of freedom. Whereas there is freedom there's no coercion, whereas there's coercion there's not freedom.
This is important, for instance, to understand the key feature by which we can tell a society in which the development advances at a reasonable pace from one in which that reasonable pace is not present. Anyone who has lived in an underdeveloped (*) country bears witness that externalities are a key feature of those countries either because a property register existing it is violated (corruption, blackmail, theft, and a regrettable etcetera) or because there is not such a register in the first place (on which the work by Hernando de Soto is particularly illustrative).
(*) In order to emphasize backwardness, but euphemistically called sometimes "developing" as if full stagnation would be possible and as trying to convey basically the opposite idea of what really happens in countries composed of mostly poor people under world standards, i. e. almost absence of a developing pace.
Sunday, June 10, 2012
Beyond a college assignment
Wednesday, May 23, 2012
In praise of Rothbard the economist
It's usual to consider Murray Rothbard as the most eccentric, radical, intolerant, pure kind of Austrian economist, the remotest land to Neoclassicism.
I guess that this view about Rothbard comes from his anarcho-capitalistic political views, sharp tongue, and being author of a rare criticism on Adam Smith in which the otherwise deemed as the father of modern economics and a champion of the free market is left as an "inveterate plagiarist" inconsistent in his defense of laissez-faire. But note that this three "defects" of Rothbard deal with his activities as a political philosopher, agitator, and historian, but none essentially with his capability as an economist.
However, there's just no much of a picture of Rothbard the pure economist. I think that this is because people just don't use to read Rothbard's work on economics, in particular Man, Economy, and State. Why reading a 1441 pages long treatise which is merely a secondhand paraphrase to the original and in any case shorter Human Action?
Well, in order to understand the irreplaceable role of Rothbard in the tradition of the Austrian School in particular and the economic science in general we have to pay attention to Rothbard background in the first place.
Rothbard, at difference of the previous generations of the Austrian school economists, is a born American, natively speaking English, and being originally trained in the tradition of Neoclassical economics. He understands and feels Anglo-American culture and Anglo-American (aka Neoclassical) economics in a way in which no native Austrian could dream of, and which certainly neither Hayek nor Mises master at that level. Rothbard is a natural.
It is only after earning a BA and a MA on economics at Columbia University that he stumbled onto the Austrian school while reading a book by so orthodox authors as George Stigler and Milton Friedman.
He then begins to learn Austrian economics in a passionate, intense and deep way, eventually being guided by the Mises itself. Due to the early stage in which he begins to study under Mises in America (less than six years after Mises migrated) and the intensity of his learning, it can be hardly an exaggeration to call Rothbard the first Austrian economist of the American era of the school. (A few American economists, say Benjamin Anderson, had previously studied in the Austrian school tradition but they had done so in Austria and in a time in which Austrian economics wasn't seen as different of mainstream economics, i.e. before Keynes. They couldn't be bridges since there were no gaps.)
So, what is really Rothbard? If you take seriously Rothbard as an economist and pay no attention to his caustic rhetoric (if there were ten ways of saying something Rothbard was to choose the most upsetting), you're going to discover an originally Neoclassical trained economist then turned into conversant with Austrian economics and you can see all the way his strong Neoclassical influence, from the authors he quote, through the use of graphs, through the examples he uses, through the concepts he uses, through the very analysis he undertakes. Hide the author's name from his Man, Economy, and State and ask someone to guess if the analysis is either Austrian or Neoclassical, and, behold, you bet not anyone is going to be sure or give the same answer than anybody else.
Rothbard is no less than a bridge to teach Austrian economics to Neoclassical trained economists (notwithstanding being an utmost tool to learn economics from scratch). He goes far beyond the translation of Nationalökonomie into Human Action so that Anglo-American students learn Austrian economics. Because Man, Economy, and State is not a translation from German into English. It is a translation from Austrian into Neoclassical. Even more, he at once puts Neoclassical economics into Austrian dress and "Neoclassicalizes" Austrian economics.
Rothbard is a sort of Saint Paul, an apostle to the Gentiles. Because of that plus its neat exposition and Easter-bunny pieces of original contribution, I have no doubt in recommending,at least to the beginner, Man, Economy, and State over Human Action.
In this stage of the Austrian school's evolution, characterized by its being mostly American and flourishing in English language (with a terrific impulse of internet, the great Privatseminar where everybody from Costa Rican proletarians to Harvard mollycoddles can learn and teach), the potential contribution of Rothabard cannot be underestimated.
I guess that this view about Rothbard comes from his anarcho-capitalistic political views, sharp tongue, and being author of a rare criticism on Adam Smith in which the otherwise deemed as the father of modern economics and a champion of the free market is left as an "inveterate plagiarist" inconsistent in his defense of laissez-faire. But note that this three "defects" of Rothbard deal with his activities as a political philosopher, agitator, and historian, but none essentially with his capability as an economist.
However, there's just no much of a picture of Rothbard the pure economist. I think that this is because people just don't use to read Rothbard's work on economics, in particular Man, Economy, and State. Why reading a 1441 pages long treatise which is merely a secondhand paraphrase to the original and in any case shorter Human Action?
Well, in order to understand the irreplaceable role of Rothbard in the tradition of the Austrian School in particular and the economic science in general we have to pay attention to Rothbard background in the first place.
Rothbard, at difference of the previous generations of the Austrian school economists, is a born American, natively speaking English, and being originally trained in the tradition of Neoclassical economics. He understands and feels Anglo-American culture and Anglo-American (aka Neoclassical) economics in a way in which no native Austrian could dream of, and which certainly neither Hayek nor Mises master at that level. Rothbard is a natural.
It is only after earning a BA and a MA on economics at Columbia University that he stumbled onto the Austrian school while reading a book by so orthodox authors as George Stigler and Milton Friedman.
He then begins to learn Austrian economics in a passionate, intense and deep way, eventually being guided by the Mises itself. Due to the early stage in which he begins to study under Mises in America (less than six years after Mises migrated) and the intensity of his learning, it can be hardly an exaggeration to call Rothbard the first Austrian economist of the American era of the school. (A few American economists, say Benjamin Anderson, had previously studied in the Austrian school tradition but they had done so in Austria and in a time in which Austrian economics wasn't seen as different of mainstream economics, i.e. before Keynes. They couldn't be bridges since there were no gaps.)
So, what is really Rothbard? If you take seriously Rothbard as an economist and pay no attention to his caustic rhetoric (if there were ten ways of saying something Rothbard was to choose the most upsetting), you're going to discover an originally Neoclassical trained economist then turned into conversant with Austrian economics and you can see all the way his strong Neoclassical influence, from the authors he quote, through the use of graphs, through the examples he uses, through the concepts he uses, through the very analysis he undertakes. Hide the author's name from his Man, Economy, and State and ask someone to guess if the analysis is either Austrian or Neoclassical, and, behold, you bet not anyone is going to be sure or give the same answer than anybody else.
Rothbard is no less than a bridge to teach Austrian economics to Neoclassical trained economists (notwithstanding being an utmost tool to learn economics from scratch). He goes far beyond the translation of Nationalökonomie into Human Action so that Anglo-American students learn Austrian economics. Because Man, Economy, and State is not a translation from German into English. It is a translation from Austrian into Neoclassical. Even more, he at once puts Neoclassical economics into Austrian dress and "Neoclassicalizes" Austrian economics.
Rothbard is a sort of Saint Paul, an apostle to the Gentiles. Because of that plus its neat exposition and Easter-bunny pieces of original contribution, I have no doubt in recommending,at least to the beginner, Man, Economy, and State over Human Action.
In this stage of the Austrian school's evolution, characterized by its being mostly American and flourishing in English language (with a terrific impulse of internet, the great Privatseminar where everybody from Costa Rican proletarians to Harvard mollycoddles can learn and teach), the potential contribution of Rothabard cannot be underestimated.
Saturday, May 19, 2012
Clash of titans?
Are Mises's definition of "economics" and Hayek's definition of "market" incompatible with each other? Mises defines economics as the science whose study subject is purposeful behavior. On the other hand, Hayek stresses the fact that a spontaneous order is by itself purposeless, it doesn't have a purpose of its own. Relating these two odeas, one could be led to the perplexing conclusion that economics doesn't deal with the analysis of the spontaneous order of the market. Since this doesn't seem to match common sense or the usefulness of economics, then either Mises or Hayek or both have not the most useful definition of their respective concepts, or the relation above between the definitions of economics and spontaneous order is not the most suitable. I feel that the problem is with Mises.
Thursday, May 17, 2012
A-realistic assumptions
Tons of mischief would have been saved in the epistemology of economics had Friedman referred to the a-realism of the assumptions rather than to its unrealism. Friedman's whole point is easily understood and made compatible with, say, praxeological epistemology if you realize that the role of assumptions is to describe only the relevant elements of reality, therefore remaining necessarily silent to the rest of the description of reality. Assumptions can't be fully descriptive. That's the essence of Friedman's. But this feature refers to a lack of conveying information, not to the conveying of false information.
When the assumption of "perfect information" is given, this is just an economic way of saying that no attempt of analysis will be made with the theory to explain the imperfection of information. The assumption is a clause of resignation. Yes, a very coarse, superficial, and ultimately wrong exegesis would state that perfect information is an unrealistic assumption because information isn't really perfect, but the true role of the assumptions is rather a-realistic: to give up the possibility of analyzing the role of the imperfection of information, to abstract the phenomenon to study from informational rough edges, to specialize the theory in certain other problems not related to information. But, what's of the most importance regarding Friedman's conclusions: this resignation is content-meaningful. It's not just irrelevant whether it's a-realistic or not: it is precisely the way in which the very boundaries of the explanatory power of the theory is defined, it alone tells us what for and what not for is the theory! You have to pay close attention to the propositions stated through assumptions because they tell you when can you use the theory. Maybe if we understand this, we can be not so harsh as Hayek when he bitterly criticizes the whole equilibrium analysis (see his "The Use of Knowledge in Society") or when Kirzner does the analogous with the model of perfect competition (in "Competition & Entrepreneurship)".
I think that the true contribution of Friedman can be stated as "the violation of the assumptions of a theory have no appreciable effect on the implications of such a theory". (Compare to page 18 in the original edition of the essay.)
Additionally, even if more implicitly and less frequently quoted, I think that an important contribution of Friedman's essay is the fact that every theory is a construction, a designed, and in this sense, artificial, explanation of reality; that there is no such a thing as a "real" or utopically true explanation beyond the theory.
I think that the true contribution of Friedman can be stated as "the violation of the assumptions of a theory have no appreciable effect on the implications of such a theory". (Compare to page 18 in the original edition of the essay.)
Additionally, even if more implicitly and less frequently quoted, I think that an important contribution of Friedman's essay is the fact that every theory is a construction, a designed, and in this sense, artificial, explanation of reality; that there is no such a thing as a "real" or utopically true explanation beyond the theory.
Friday, May 4, 2012
Economists and the market
You can classify economists into two groups: on the one side, those radicals who believe that the market is the final solution to any economic problem, on the other side, those who don't understand the market.
Saturday, April 28, 2012
The lesson of economics most often forgotten
Factors affecting a free labor market ultimately are reflected in wages, not in unemployment. Persistently high unemployment is due exclusively to minimum wages.
Wednesday, April 11, 2012
Recent evolution of Costa Rican public finance
I was just reviewing data on the statement of operations of the central government of Costa Rica and I thought that maybe some of you can find interesting findings.
Data are for the central government of Costa Rica. Although Costa Rica is a unitary republic, the central government is somewhat similar to the "federal government". It excludes municipalities and state owned companies. Data are for the period Dec-06 through Jan-12 and are measured in multiples of real colones of Dec-06. The source is www.bccr.fi.cr.
As you see, there was a surplus since Dec-07 through Dec-08. Basically, the deficit has been increasing since then. The maximum deficit occurred in Oct-11. A first interesting finding is that the deficit was due more to income reduction than to expenditure expansion.
Reviewing sources of income, one finds that, on average, collection of customs taxes account for 28% of income and earnings taxes for 27%.
Customs diminished 24% in the period Oct-08 through Nov-09. This occurred mainly due to the international financial crisis and consequent shrinkage of international trade.
This diminution accounts for the main source of deficit increase.
Sunday, April 8, 2012
Protectionism and Krugman
Imagine you begin to sell some good you produce. People buy a lot of product. You just can't cope with so much demand. You invest an important share of your wealth in a very specific machine only useful for manufacture the good you sell. You invest because you expect demand for your good to continue growing. But once you have made the investment, that by the way nobody commanded you to make, you realize that people are beginning to buy from a foreign firm which is selling cheaper than you can, even after the investment of your machine. Yes, you get hurt. But you get hurt because the expectations you built disappointed you, not because the owners of that foreign firm are violating any right you were previously entitled to on the budgets of the potential buyers of your good. However, if in order to avoid competition by the foreign competition you coerce either buyers or other sellers or both so that they cannot make transactions among themselves, it is you the violator. Aren't you?
It is tragicomic to me when noble Krugman et al, in their "International Economics", 9/e, page 51 et seq., say some people get hurt because of trade. Yes, they get hurt, but they get hurt as I get hurt when somebody informs me that my plan to travel to your farm on next Saturday accompanied by Angela Lansbury and by Mr. Obama in order to enjoy a Jim Carrey's play with live music by the original Sepultura's lineup is not going to be possible. It is just a correction on my expectations, precisely the damn thing which markets do, so that we can keep as coordinated as possible in a world sometimes less than ideal.
But if the situation is explained so that it looks that I got hurt because somebody else's "fault", consequently implying a violation of a right of mine (to fullfill my expectations even at expense of violating a true right of others), I guess the analysis is not the best, to say the least.
Not everybody wins with trade? Some people get hurt with trade? In the devious sense setted out by Krugman et al... Well, dah! Because, yes, according to my plan I get hurt when cruel Mr. Obama prefers to be in political meetings than to enjoy Max Cavalera's twist and shout, but this is very different than violating a presumed right of mine. You cannot avoid feeling some hideous taste to deception in Krugman exposure.
And this is what our children are learning in their international trade courses. So primitive a stage, we still are in.
It is tragicomic to me when noble Krugman et al, in their "International Economics", 9/e, page 51 et seq., say some people get hurt because of trade. Yes, they get hurt, but they get hurt as I get hurt when somebody informs me that my plan to travel to your farm on next Saturday accompanied by Angela Lansbury and by Mr. Obama in order to enjoy a Jim Carrey's play with live music by the original Sepultura's lineup is not going to be possible. It is just a correction on my expectations, precisely the damn thing which markets do, so that we can keep as coordinated as possible in a world sometimes less than ideal.
But if the situation is explained so that it looks that I got hurt because somebody else's "fault", consequently implying a violation of a right of mine (to fullfill my expectations even at expense of violating a true right of others), I guess the analysis is not the best, to say the least.
Not everybody wins with trade? Some people get hurt with trade? In the devious sense setted out by Krugman et al... Well, dah! Because, yes, according to my plan I get hurt when cruel Mr. Obama prefers to be in political meetings than to enjoy Max Cavalera's twist and shout, but this is very different than violating a presumed right of mine. You cannot avoid feeling some hideous taste to deception in Krugman exposure.
And this is what our children are learning in their international trade courses. So primitive a stage, we still are in.
Saturday, March 31, 2012
Just trade
It is pleonastic to talk about "free" trade. Only as long as it is "free", can an action be considered "trade".
(By the way, can somebody give me an example of "unfair" trade?)
(By the way, can somebody give me an example of "unfair" trade?)
On the side of the worker
The most effective way to put a (definite) end to institutional unemployment and galloping inflation is to convince workers to accept that nominal wages can diminish at times and that avoiding the proscription of such declines is ultimately beneficial for they themselves. The elaboration and polish of an explanation as clear and simple as possible, prepared not for the academician but for the masses of workers is probably one of the most important tasks of economics.
Saturday, March 24, 2012
A lesson on microeconomics
The production theory explains how production decisions, not supply decisions, are taken. Similarly, supply decisions doesn't depend on production decisions.
The market for protectionism
Protection from competition provided through coercion to competitors is like any other good. The producer will buy protection so long as he values better the income he receives than the expenditure he incurs in.
One factor of production
If you use only one factor of production, by definition, you can only produce a perfect substitute of that factor of production.
When, for instance, Krugman et al, in their book International Economics 9/E, page 26 et seq. speak about a basic model with "only one factor of production", they are not using the concept of "factor of production" as used in the economic theory of production. Not at all! They are merely using the term "labor" as a numeraire of unit of account.
Sunday, March 18, 2012
Mises on Popper
"The positivistic principle of verifiability as rectified by Popper is unassailable as an epistemological principle of the natural sciences. But it is meaningless when applied to anything about which the natural sciences canno supply any information [as in the case of the sciences of human action, including economics]." Ludwig von Mises, The Ultimate Foundation of Economic Science, page 108.
Saturday, March 17, 2012
Market failure
A market failure is a situation in which the economist fails to understand the market.
Friday, March 16, 2012
On the Church
I guess that it can be told with respect to the Church what Mises told about the utilitarian philosophy, that it
"does not look upon the rules of morality as upon arbitrary laws imposed upon man by a tyrannical Deity with which man has to comply without asking any further questions. To behave in compliance with the rules that are required for the preservation of social cooperation is for man the only means to attain safely all those ends that he wants to attain." The Ultimate Foundation of Economic Science, page 95.
"does not look upon the rules of morality as upon arbitrary laws imposed upon man by a tyrannical Deity with which man has to comply without asking any further questions. To behave in compliance with the rules that are required for the preservation of social cooperation is for man the only means to attain safely all those ends that he wants to attain." The Ultimate Foundation of Economic Science, page 95.
Sunday, March 11, 2012
My summary of Hayek's "The Use of Knowledge in Society"
Even if equilibrium analysis is a useful preliminary to the study of the economic problem which society faces, namely the unavoidable imperfection of man's knowledge and the consequent need for a process by which knowledge is constantly communicated and acquired, it is high time to remember that it systematically leaves out the explanation of the very problem itself, of economic process.
Wednesday, March 7, 2012
Samuelson on Hayek
I want to thank Alejandro Jenkins for call my attention on this brief but interesting article by Paul Samuelson on Hayek. It resulted very interesting to me to see how a studied economist not agreeing with Hayek sees his work.
Saturday, March 3, 2012
Not a science about needs
Economics is not about needs if they aren't expected to be satisfied through purposive behavior. Nevertheless, purposive behavior always imply need.
Wednesday, February 22, 2012
Causeffect
The "cause" of some historical situation is all other historical events. Indeed, there is no causation here but simultaneity. Calling something a cause and something an effect is arbitrary. There is just concatenate things happening.
Causation is logical, not chronological. Causation, in general, is not useful to forecast history. It's useful just to explain abstract features of simultaneous situations. As soon as causation is unavoidably established, future disappears. It is just present.
Causation is logical, not chronological. Causation, in general, is not useful to forecast history. It's useful just to explain abstract features of simultaneous situations. As soon as causation is unavoidably established, future disappears. It is just present.
Monday, February 13, 2012
Mises paraphrasing Friedman's "The Methodology of Positive Economics"
"The answer to the question whether or not definite theorems of praxeology apply to a definite problem of action depends on the establishment of whether or not the special assumptions that characterize this theorem are of any value for the cognition of reality. To be sure, it does not depend on the answer to the question whether or not these assumptions correspond to the real state of affairs that the praxelolgists want to investigate. The imaginary constructions that are the main―or, as some people would rather say, the only—mental tool of praxeology describe conditions that can never be present in the reality of action. Yet they are indispensable for conceiving what is going on in this reality." Ludwig von Mises, The Ultimate Foundation of Economic Science, page 37.
Sunday, February 12, 2012
A law of iterated preference
The self cannot choose a change in its own preferences. Changes in preferences can be only externally determined.
The mind, to be sure, can prefer that the body could react differently to stimuli. The mind could think: "I wished I could stop to eat disorderly" but that deals with the mind (the first "I") making reference to something external (the second "I"): the bodily reaction. It is not different, in essence, to having a pet animal and think "I wished my dog could stop eat disorderly".
But a preference on the own preferences cannot change those preferences. They already are what they are, by the very choice.
An application of this idea to the economic theory is that, an agent, by definition, cannot know about shifts in his own demand or supply curves.
This assertion (that the self cannot consciously change its own preferences) is comparable to the Law of Iterated Expectations: "if I expect to expect something at some date in the future, then I already expect that something at present (Nassim Taleb, The Black Swan).
The mind, to be sure, can prefer that the body could react differently to stimuli. The mind could think: "I wished I could stop to eat disorderly" but that deals with the mind (the first "I") making reference to something external (the second "I"): the bodily reaction. It is not different, in essence, to having a pet animal and think "I wished my dog could stop eat disorderly".
But a preference on the own preferences cannot change those preferences. They already are what they are, by the very choice.
An application of this idea to the economic theory is that, an agent, by definition, cannot know about shifts in his own demand or supply curves.
This assertion (that the self cannot consciously change its own preferences) is comparable to the Law of Iterated Expectations: "if I expect to expect something at some date in the future, then I already expect that something at present (Nassim Taleb, The Black Swan).
Saturday, January 7, 2012
Mises as a true conservative
"Faithfulness to tradition means to the historian observance of the fundamental rule of human action, namely, ceaseless striving to improve conditions." Ludwig von Mises, "Theory and History", page 296.
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