We all save lives

I meet this guy and he says: "My work is to save lives. I'm a doctor". I answer: "Great! Mine too is to save lives!". He says: "Are you a doctor too?". I answer: "No, I'm an economist". He sees me frowning. I explain:

"An economist job is, for instance, to tell people how the economy is faring. This helps people to take decisions; in particular decisions related with the best way to finance colleges where medicine is taught, to finance profitable colleges and to shut down unprofitable ones. Other people decides on hiring or firing doctors, or on how to invest funds in order to pay hospital rolls.

By the way, all other people too helps in saving lives: the security officer outside the hospital, the traffic officer in the streets which helps doctors and security officers to arrive on time to their jobs, the man who sells the yachts which are the reason why some doctors decide to work at night, etc.

The fact that we only see the clock hands but not the pinions or ratchets are not an argument at all to conclude that only the hands are instrumental to allow a clock to work."

So, yes the doctor helps to save lives. He is the last part of a process not designed (and not designable!) by anyone but which nevertheless works. But as long as the doctor has a claim to say that he saves lives, anyone else has it too.

General equilibrium never seen

The economy works, every single economic action is undertaken, precisely because and as long as the law of one price is not being accomplished.

The economy lives because there is no equilibrium.

Equilibrium and the law of one price are ultimate states. The economy always tends to them but never reach them beacause those states are themselves constantly changing due to disequilibrating forces (changes in preferences, technologies, and resource availability; and in general by our changing attitude towards resources).

Nevertheless, the market is that spontaneous order through which information flows towards entrepreneurs which then interpret them and act in order to make use of disequilibrium opportunities. By doing this entrepreneurs, this is all of us in our aim to improve our condition by buying cheap and selling dear, embody the very invisible equilibrating hand of the market, this is the economic or social manifestation of God, as it were.

Market is the most efficient mechanism

The interaction of the information of agents with, in principle, different plans is the very definition of what a market is. It is true that a market could incorporate not all conceivable information, but markets do incorporate all possible information. If information is not already in the market, nobody (in particular, not the government authorities) can incorporate further information.

A market reaches all possible efficiency. There is no further informational, operating, or allocative efficiency beyond the market. In that sense, if you accuse the market of being inefficient, automatically you neglect the possibility of any further possibility whatsoever of improving that inefficiency.

If you do find a possibility of improving efficiency, you automatically become part of the market, not something beyond it.

There is, for instance, no way of reflecting new information faster than through the market. To put another way, the quickest way in which new information can be reflected is precisely what a market is.

Planned or spontaneous?

Picture 1

Look at the first picture. Can you say, just by seeing this Rubik's cube, whether that combination is purposeful or not?

Picture 2

Now, take a look at the second picture. Is it sorted? Is there order in it?

After seeing the second picture, take another look at the first one again and answer again the first question. Did your opinion change?

Picture 3

Now an (apparent) easy one. Take a look at the third picture. Is the cube on it solved?

Picture 4

Now, observe the fourth picture; this is: for God sake, take an actual look at the damn color disposition of the sub-cubes!

Does this fourth picture somehow change your answer to the question with respect to the third photo? (Once again, compare the third and fourth pictures.)

How many "disordered" cubes there are out of the two?


Is one of them already solved? If so, can you say which one?

Can it be that both are already solved?

Can it be that none is already solved?

Picture 5

Finally (we're almost done), take a look at the fifth picture. Is there a chance that the cube depicted there is disordered? Is there a chance that the cube in Picture 3 is more "ordered" than the cube in Picture 5?

A manifesto on the epistemology of economics

1. The prime cause of economic phenomena is purposeful behavior. Economics qua economics doesn't have any more to explain once it arrives at this prime cause.

2. Every economic phenomenon is caused ultimately caused by the prime cause. Something not linkable to the prime cause is, ex definitione, not economic.

3. Through logic, it is possible to develop explanations about economic phenomena whose logic concatenation could not be obvious at first sight.

4. The interaction of the purposeful behavior of different agents or of the same agent through time or of the same agent with regard to different goals could generate the emergence of spontaneous orders which are themselves purposeless.

5. The method of economic logic is useful to explain economic orders and, through this, to arrive at pattern predictions, empirically falsifiable.

6. Economic logic is logically falsifiable in the sense that the chain of reasoning can be proven wrong by not obeying the logic method.

7. Economic logic is empirically falsifiable in principle, in the sense that its primitive assumptions can be proven not to be present in a factual situation.

8. Economic logic is often empirically not falsifiable in practice, in the sense that there is empirically impossible sometimes or always to falsify some primitive assumptions. For instance, it is impossible to empirically falsify that an assumed agent is not such. At the end, the attribution of some assumptions to facts is often a matter of faith. For instance, there is an ultimate impossibility for you to falsify whether this text is the work of an agent (i. e. the external successful fruit of a will) or just characters randomly disposed. Under a model which assigns equal chance to a list of characters to be randomly disposed in each position for a string of some positions, the chance that this exact text be the fruit of pure chance is higher than zero. So, at the end there is an inextricable, this is a necessary, portion the faith, even if small, in your hypothesis that this text is a fruit of some will, a purposeful behavior, an economic phenomenon.

9. Whichever which is not logically and therefore generally modelable is history, is particular.

10. The particular can be approached through statistics, but this, to be sure, is not economic logic.

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.

A proposal for market-led higher education

A proposal for several distinct but related industries, in principle decentralized:

Classroom rental. Or rather classroom, laboratory, or any other room (and tools) for teaching. A possible business model consists in auctioning classrooms for a definite period of time. So, the first rental company determines the length of terms, be semesters, thirds, quarters, etc. I guess that the auctioning would be directed towards teachers directly. Such aspects as classroom quality, building location, and period length would be a good contested by the firms serving the market, and this good would be separated from other industries such as teaching and certification. They could also, as a byproduct, sell curriculum prospects of registered students to the curriculum companies.

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.

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.

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.

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.

Starkey on institutions

"Almost all institutions are monarchical." David Starkey

Government failure as a market failure as no failure at all

Some people say that there are government failures rather than market failures. However, one could ask how is that a already-so-well-working market allows for a failing government to appear and grow up. Or maybe, a failing State is not but a stage in the institutional development in the way of an ever-improving market.

God as non-planned (spontaneous) order

The invisible hand is God's hand.

So, quoting Mises: "Fort the agnostic, atheistic, and antitheistic historians and economists there is no need to refer to Smith's and Bastiat's invisible hand." Theory and History, page 169.

Market as an information system

A market is a system of creation and spread of information. No more, no less.

Market and freedom

The only condition for a market is freedom to exchange.

A quote for reflexion on this Holy Week

"[T]he great lesson of humility which science teaches us, that we can never be omnipotent or omniscient, is the same as that of all great religions: man is not and never will be the god before whom he must bow down." (1)

(1) Cohen, Morris. Reason and Nature. 1931-Houghton Mifflin Harcourt-. Page 449. Significantly enough, this exact quote is used by Hayek to close the part one of his The Counter-Revolution of Science.

Egalitarianism and constructivism in flat tax

In (even classical) liberalism, there's egalitarianism and constructivism. As I'm absolutely neither an egalitarian nor a constructivist, I happen not to be able to be a liberal. I'm a conservative.

Take for instance, taxes. Many liberals support a flat tax on grounds of egalitarianism (everyone paying proportionally for government) and, by believing they can re-design the spontaneous order of the tax constitution, they give themselves away as constructivist. They overlook the unintended consequences a tax reform (even a flat tax reform) can bring about.

Hayek the missionary

One of the strongest cases I've found to remain Catholic is Hayek's thesis, a summary of which appears in the next text:

"It may indeed prove to be far the most difficult and not the least important task for human reason rationally to comprehend its own limitations. It is essential for the growth of reason that as individuals we should bow to forces and obey principles which we cannot hope fully to understand, yet on which the advance and even the preservation of civilization depend. Historically this has been achieved by the influence of the various religious creeds and by traditions and superstitions which made men submit to those forces by an appeal to his emotions rather than to his reason. The most dangerous stage in the growth of civilization may well be that in which man has come to regard all these beliefs as superstitions and refuses to accept or to submit to anything which he does not rationally understand. The rationalist whose reason is not sufficient to teach him those limitations of the powers of conscious reason, and who despises all the institutions and customs which have not been consciously designed, would thus become the destroyer of the civilization built upon them. This may well prove a hurdle which man will repeatedly reach, only to be thrown back into barbarism." (1)

(1) Hayek, Friedrich. The Counter-Revolution of Science. 1952 -LibertyPress, 1979-. Pages 162-163.

Freedom is daughter of the market

It is not freedom what is a necessary condition for the development of the market. Quite the opposite, is the market order what allows the birth of freedom.

Michael Moore as an equilibrating force of the market

As someone who doesn't understand enough the complexities of the market as to feel himself able to scholarly criticizing it, I can't but feel a deep suspicion of Michael Moore's superficial critiques to the market order.

Nevertheless, I feel obliged to split Moore's criticism to the market system from his complaints to specific companies.

I think that "Moore, The Company Critic" is a way of broadly transmitting information valuable for exchange decisions. In this sense, Moore is a particularly valuable piece in the intricate information complex which we use to call the market.