Austrianism = unscientific

Economics Economics Questions
81

Intrinsic value is usually in reference to money, for example old stone boulders or coins or modern paper represent far more value than their intrinsic value, so we generally describe money as having “no intrinsic value” but in reality the items themselves have some small amount, because they are physical matter. I could break my stone boulder and use it as a table. I could make a neckless of pennies and wear it as jewlry. I could take my cash and burn it to start a small fire. None of these may be impressive as values, but the inherent intrinsic value is not zero.

And further, trying to assume that nothing has intrinic value, as you seem to suggest, is ridiculous.

82

you seem to think that there was a point of time in the 19th century when no-one owned any oil aside from Rockefeller.

83

the austrian position is that no economic goods have intrinsic value. to think anything else is ridiculous. perhaps now you should go away. or read some menger/bohm-bawerk/mises

84

Yes, fiat money does more or less work that way, but one still does not speak of “intrinsic” value except in a very loose sense. Gold, likewise, has no intrinsic value, except in a very loose, metaphorical sense.

All valuation is the valuation of some object by some evaluator. It is in that sense agent-relative. No value exists apart from agents to hold it as a value. Most economists would go further and just call it “subjective”, except perhaps for old school Marxians.

85

If they only demand sex from person A, and person A is unwilling to give it to them, they cannot satisfy that demand and must seek out a substitute good. I can see why you might think the price is “infinity” but it isn’t infinity. I guess you could say that it’s undefined. But basically what you’re trying to do is find an intersection between two curves when one curve does not exist. The intersection is not infinity, the answer is there is no intersection, aka there is no price. (notice no price is not the same thing as no charge)

86

the use of curves, is an example of poor neoclassical methodology. if you cant say what you are trying to tell me without introducing curves; then im not interested.

87

I agree the value is subjective to a high degree, but it’s not arbitrary. It’s based on how much people want it and how oftenb, and usually that demand is informed because of some sort of value they get from it, so, logically, it has a finite value greater than zero. A value that can only be described as intrinsic in nature. But I see your point.

88

Things in nature have properties. These properties can be found to have a causal relation with percieved ends by men. When men use the things in nature to satisfy their ends, there is value in it. Value of things result from finding of ends/goals/whatnot and their satisfaction by acting men. The things left to their own devices can have absolutely no value, as value is a result from human action.

89

Indeed it is not arbitrary but intrinsic goes further and points to an existence apart from agents who carry out valuations. So to be accurate it is agent-relative, as value is relative to the agent’s ends, i.e. value is the conduciveness of the means to servicing those ends.

90

That’s an interesting point, so we’re disagreeing on what “value means” well since the aim of my post wasn’t at all hinged on whether or not something has intrinsic value, I’ll let you have that one. Though I disagree to a point.

The main point was that the price of the tulips was far greater than the actual value (yes value) that should have been assigned to them. For example it might have been something like this.

Actual Value = Beauty and Usefulness of the Tulip

Market Value = Beauty/Usefulness of the Tulip + the expectation that demand will keep rising

Because demand cannot always keep rising, there is an inflation which ends in a market failure. And you cannot dispute that because history proved it with the incredible crash in the value of the flower for no other reason than speculative bubbles eventually pop.

91

Math is a construct of logic, and when we’re dealing with something that involves concrete data, it is highly useful to display that data in the most logical way, aka math. If you think math is some whimsical fiction that has no relevance, pertainance, or usefulness then you can tell that to the man who landed on the moon. Science depends on math. If you are going to dismiss math then I am going to dismiss you, because we’re on two entirely separate incompatable planes.

92

i think its insightful that you’ve transitioned form one fallacy (about market failure through ‘natural’ monopoly) to another fallacy that the free market suffers from speculative bubbles, whereas a managed economy does not.

which one do you want us to blast to bits the hardest?, because you are asking us to put in a lot of effort to do both. and the fact that we are willing to demolish either, should tell you we are serious, and that perhaps you should spend sometime on quiet reflection, and reading something about what the Austrian perspective really is instead of barging here with all your assumptions and muddleheaded inherited fallacies.

93

dismissing curves is not dismissing maths.

the point is math is great at adding potatoes. not so good at telling us how many imaginary animals there are in a real world room.

your favourite demand curves, give mathematical rigour to elaborate fictions.

referrence: http://mises.org/daily/931

94

You are going to reference Standard Oil? Do you understand how businesses work? They raise capital from multiple investors.

First of all, Standard Oil never had a monopoly on the market. At most, they had ~80% of the market, at its height. When it was broken up, it only had ~60% of the market.

Second of all, the cost of oil fell because of Standard Oil’s efficiency. Do you think this is detrimental to the consumer?

Third, and last, if people wanted to enter the market, they could do so easily by finding a better company and financing it.

95

There’s no reason why there could not be a market where the viable market structure is to have just one firm. The “optimal” number of firms on a given market is of no interest - a market could have a firm or many firms, and yet be just as competetive as any other.

The point to consider is barrier to entry, just as you said. Now, what is the greatest barrier to entry imagible? Legislation.

You’re making a rather strong blanket statement here. You’re saying that a given market could be such, that there would be a need of huge capital investments in order to compete with the “monopolist”. There’s a rather blatant problem with this sort of reasoning - substitutes. There’s no concievable, realistic market where there are no possible substitutes for the product offered by the “monopolist”. And if this holds, then there’s no realistic scenario possible where there are such barriers to entry, that would grant a real monopoly to a company, other than legislation.

96

Sorry, still amateurish. Firstly, maybe I can guess what you mean, but you should choose your words more carefully. Austrian economics is not a “laissez faire approach”. It is merely a description of reality. If you think it is a correct description of reality then the conclusion that one must draw (which it does) is that we will all get the best out of the economy by not having govt meddle in it.

Secondly, Austrian economics does not depend or assume “an ideal level of competition”. Austrian economists think the perfect competition idea is nonsense, and, to quote Murray Rothbard, “would be bad if we had it”. Austrian economics recognises that sometimes it is hard to break into industries, and there is some inelasticity of demand and prices, but, sorry to say, that’s as good as it gets. You can’t fix this by meddling in the economy - you will just make it worse.

Thirdly, your example completely ignores a major point (that is often ignored by “perfect competition” types) and that is that people don’t actually have to buy pizza at all. They can buy KFC, or McDs, or buy bread and make toast. As long as there is something else for people to do with their food dollar, then the demand is in fact elastic. This is a slightly different point but related so I won’t start a new para - to say that there nothing stopping your so-called monopolistic pizza parlor from charging prices well above the true value is just silly. Unless someone is being forced to sell, or forced to buy, or both, then the price IS the true value (I hope I don’t need to elaborate on that).

Lastly, there IS something that the market can do to correct it. Over time, competition in the market will correct it. Monopolies cannot last for long periods of time without assistance from govt.

Really lastly, one thing that comes through from your argument (which is not the first time we have heard it) is an assumption that pizza should be available to you at a price that you consider good or proper value. This, my friend, is no-one’s right. If you think pizza should be made and sold cheaper, then you go out and do it. Otherwise you just have to settle for what the person who is doing it is willing to sell it for.

No, sorry, now really lastly - over-the-odds profit are regarded by Austrian economists as payment for being able to predict the future correctly, and before everyone else gets into the game. There are not too many pizza parlors around now making super-profits.

I have to stop now - too much real work to do…

R

F

97

That is a fascinating and wonderful website. I can imagine building a game out of his assertions.. call it “Spot the fallacy!”.. or better.. Fallacy Fever! Yeah, that’s it! Actually I’m quite glad to have found it. I can’t think of a better study guide than to refute his entire webpage.

His 10th ammendment argument amounts to “We won, stop complaining.”

His explication of rights is also … interesting. Obvious that rights are not inalienable because hitler repealed the rights of jews? He later specifies the difference between is and ought.. funny he forgot about that up above. He explains that whites had the right to own blacks even though they morally shouldn’t have… so.. why do people have a right not to be enslaved? I guess because the majority of the population wants it that way. /shrug.

98

Your point about market failure is completely off. If there is a pizza company which is offering pizza in a market with high costs then the barrier to entry is being able to finance those high costs while still selling pizza at (to use your example) a high price. If those costs are so high that no other company can enter that market then the company which already exists is actually providing a great service to the market participants. For whatever reason this company is able to shoulder these high costs and still offer pizza to people. Without this company no one would have pizza.

The only way for a new company to enter this market would be if it could also afford these high costs but offer pizza at a comparable or lower price. The fact that one company is able to afford this “barrier to entry” is actually again beneficial to market participants. As long as you assume that the high costs are not created or caused by government intervention then those costs are simply a result of the market for the particular products needed to make pizza. A company which is able to shoulder these costs should be appreciated by the people who can buy pizza at whatever price rather than live in a world without pizza.

99

Indeed. CaseyKing, there is no such thing as “actual value”, “intrinsic value”, or whatever other wording there is. Value exists due to individual, subjective preferences, not by the objective properties of a good.