Agreed.
Dude. If you desire such an environment then move to Pakistan (my native land). You will see what AnCapness really means in practice. Pakistan’s governments (Federal, State, Local) are very, very, very weak with very sporadic or non-enforcement of most laws due to very, very, very small budgets (in terms of % of GDP).
Go there and try to get a job and then tell me what you think.
Mansoor
Pakistani gov’t in practice does not equal AnCapness in practice, just FYI. Perhaps your dire situation is due to widespread religious zealotry, statism in general, and the intervention of outside governments.
Start here: http://mises.org
There is not much of a state there!
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Tax laws are ignored. No enforcement!
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Legal Tender Laws can be safely ignored but most businesses still transact in the government issued currency. Austrian prediction of other private currencies spontaneously showing up have NOT come true there.
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Other Laws are ignored / enforced (very little to non-existent protection of life and property). It is truly a rule by barrel of gun of the local warlord / thugs. There are lots of jobs for thugs.
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intervention of outside governments does NOT impact most people at all by far!
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You guys need to visit there and see how AnCapness works in practice.
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All that religious zealotry stuff you think is widespread it is NOT it is just fodder for international media. I have live there I know. And if you don’t trust me just go there or send a team of Austrian economists to look around.
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Then tell me what you think.
Mansoor
Sorry, I forgot that Al-AnCappa ruled Pakistan and not the Pakistani Government and the millions of $ of foreign military “aid”.
I denounce my AnCappa ways and submit to my punishment for the brutality in this video: http://www.youtube.com/watch?v=VVg141VKxbs
Look. Most people are NOT impacted by all that aid or u.s. military presence. most aid ends up in swiss bank accounts.
Here is a real laboratory of an capness in the real world existing right now. you guys should really send a team to austrian economists to look around and see for yourself.
Mansoor
HOARDERS!
Mansoor, this sounds like it could be an interesting topic. Why don’t you start a new thread since this one has wondered from discussion of “thrift”?
Except until recently (Lehman Collapse). Swiss Banks Loaned Out that money to industrialized economies. No. it is only hoarding from point of view of the depositor. It is actually spent until Sept. 2008 (Lehman Collapse). That is why we are staring at the deflation abyss right now!
Mansoor
Ok. I will.
Look for a new thread in 2 minutes. Now, you can tell how much I have thought about this stuff!
Mansoor
all for naught.
“If we wish to preserve a free society, it is essential that we recognize that the desirability of a particular object is not sufficient justification for the use of coercion.”
Dude here it how really works:
desirability of food by a starving person = sufficient justification for the use of coercion = Pakistan
Mansoor
The people of Pakistan are starving because they have accepted the socialist doctrines of PPP, the Bhutto family, and other collectivist leaders whose quest for complete control has left your country in utter ruin. Wealth does not fall from the sky, nor it is not created by empty-promise-making politicians. It is the result of freedom, that is, voluntary exchange and the entrepreneurial spirit. Savings allows for capital accumulation, sound money and a functional price mechanism orders and maintains the capital stock. Pakistan has never known freedom, and its current chaotic condition only a fortiori supports our position, and therefore refutes yours.
If you were really interested in truth you would stop with the non-sequiturs, and open up a book. Or, you could ask questions, and stop defending already refuted Keynesian and mercantilist doctrines. Your thinking has lead you to error and fallacious conclusions.
Now that is new one: Pakistan = Socialism.
Most people can’t even read. You must visit and see for yourself. PPP has no impact on life outside Karachi and Lahore. And not much impact in Karachi and Lahore either.
Mansoor
It’s a quarter of their GDP.
Also, that’s interesting. When I hear about lack of enforcement, my gut reaction is, “They’re already taking X% of our incomes and fail to provide this basic service,” rather than, “They need Y% of our income to provide this basic service.”
Your appeals to authority mean nothing to me. Your own personal prejudices don’t undo the tragic history of Pakistan. Pakistan ranks 117 out of 170 nations on the economic freedom index, right behind Gabon. Your nonsense has been dealt with. You can either learn and progress intellectually, or remain ignorant. It’s up to you.
Telling from the other thread, the fact is that he knows just as much about Pakistan as the rest of us do, but doesn’t have the google-fu to check his information.
Also,
What does “non-sequiturs” mean? I am not that bright. Please educate me.
Mansoor
Your movie theater example is broken. Business NEVER judge investments based on future money but on money today. It is present value that matters to business owners. With inflation 3 dollars a year from now is only worth 2.86 today because costs raise.
With Deflation:
Period |
Revenue |
Imp Revenue |
Cost |
Profit |
Sum Nom Profit |
PV Profit |
Sum PV Profit |
|---|---|---|---|---|---|---|---|
1.00 |
100.00 |
100.00 |
100.00 |
0.00 |
0.00 |
0.00 |
0.00 |
2.00 |
95.00 |
98.00 |
95.00 |
3.00 |
3.00 |
3.16 |
3.16 |
3.00 |
90.25 |
96.04 |
90.25 |
5.79 |
8.79 |
6.42 |
9.57 |
4.00 |
85.74 |
94.12 |
85.74 |
8.38 |
17.17 |
9.78 |
19.35 |
5.00 |
81.45 |
92.24 |
81.45 |
10.79 |
27.96 |
13.24 |
32.59 |
6.00 |
77.38 |
90.39 |
77.38 |
13.01 |
40.97 |
16.82 |
49.41 |
7.00 |
73.51 |
88.58 |
73.51 |
15.08 |
56.05 |
20.51 |
69.92 |
8.00 |
69.83 |
86.81 |
69.83 |
16.98 |
73.03 |
24.31 |
94.23 |
9.00 |
66.34 |
85.08 |
66.34 |
18.73 |
91.76 |
28.24 |
122.47 |
10.00 |
63.02 |
83.37 |
63.02 |
20.35 |
112.11 |
32.29 |
154.76 |
11.00 |
59.87 |
81.71 |
59.87 |
21.83 |
133.94 |
36.47 |
191.23 |
Inflation:
Period |
Revenue |
Imp Revenue |
Cost |
Profit |
Sum Nom Profit |
PV Profit |
Sum PV Profit |
|---|---|---|---|---|---|---|---|
1 |
100.00 |
100.00 |
100.00 |
0.00 |
0.00 |
0.00 |
0.00 |
2 |
105.00 |
108.00 |
105.00 |
3.00 |
3.00 |
2.86 |
2.86 |
3 |
110.25 |
116.64 |
110.25 |
6.39 |
9.39 |
5.80 |
8.65 |
4 |
115.76 |
125.97 |
115.76 |
10.21 |
19.60 |
8.82 |
17.47 |
5 |
121.55 |
136.05 |
121.55 |
14.50 |
34.10 |
11.93 |
29.40 |
6 |
127.63 |
146.93 |
127.63 |
19.30 |
53.40 |
15.13 |
44.53 |
7 |
134.01 |
158.69 |
134.01 |
24.68 |
78.08 |
18.42 |
62.94 |
8 |
140.71 |
171.38 |
140.71 |
30.67 |
108.75 |
21.80 |
84.74 |
9 |
147.75 |
185.09 |
147.75 |
37.35 |
146.10 |
25.28 |
110.02 |
10 |
155.13 |
199.90 |
155.13 |
44.77 |
190.87 |
28.86 |
138.87 |
11 |
162.89 |
215.89 |
162.89 |
53.00 |
243.87 |
32.54 |
171.41 |
You are right that with inflation the payback is 8-9 years while with deflation it is 11-12 years but that is only with future money, not present value (what investment decisions are made on by businesses). In present value terms deflation pays off sooner.
Inflation doesn’t promote investment it promotes buying hard assets and hoarding of such assets, it destroys savings which is real capital. Forced low interest rates promote investment but since it isn’t backed by savings it is an unsustainable bubble.
AE guys, let me know what I have wrong.