Demonstrated Preference and "Ex Ante Utility" fallacious

Economics Economics Questions
1

If libertarians believe in demonstrated preference, then what about countries that decide to adopt socialism instead of voting for capitalism?

If libertarians believe that freedom maximizes utility “ex ante”, e.g. choosing between a Ford and a Toyote, then what if the government restricts the choice, e.g. bans Toyote and instead the choice is between Ford and Chevrolet? Would it lower utility? Is there something inherent in man that necessarily compells him to choose Toyote?

Man’s freedom is always restricted. You can’t buy a limo for example, or a magic flying car. Children have to obey their parents. If we teach people to obey, there is no utility loss in fascism - and much benefit.

2

You’re banning mutually beneficial trade between Toyota and its customers, of course it lowers utility. The arrival of Chevrolet doesn’t change that.

Freedom has nothing to do with magic flying cars. Nobody here is talking about “freedom” from scarcity.

3

Reality bans beneficial trade between The Flying Car company and its customers. But people are happy with their trade because they accept reality - you just need to get people to worship some authority and there is no utility loss.

4

  1. Countries cannot choose

  2. People can indeed reduce their own utility and in some cases forcing individuals to do something would increase their utility. It certainly does not follow that fascism will increase utility, and it definitely doesn’t follow that “If we teach people to obey, there is no utility loss in fascism”. Could you give me any example of why this would be the case, and if it is then why we should do this? What philisophical/moral basis do you have for arguing this?

5

  1. Countries = people voting.

  2. So you reject Rothbard’s reconstruction of utility economics. I’ll give you an example: forcing overweight people into concentration camps to lose weight and banning heroin.

6

Stopped reading there.

7

“Countries = people voting.”

Then yes, many vote against their own self-interest, however a big point that Austrians make is that many individuals are a lot more likely to know what is best for them in their own lives than others in their lives.

“So you reject Rothbard’s reconstruction of utility economics.”

I think that nearly every argument Rothbard made in Power and Market is extremely insightful and hits right at the heart of the matter, nonetheless I disagree with his thesis that it is impossible that government could ever improve utility, but he is perfectly right to believe that it will fail in doing so in any particular instance.

“forcing overweight people into concentration camps to lose weight”

Such programs usually aren’t that successful and a national policy that matched this would most likely cause a great deal of anguish and further body-image problems. Forcing them into “concentration camps”… Seriously? Does this sound like those in the fat “concentration camps” would be having a good time, miss out on things they enjoy from their normal lives, and people around them see decreases in living standards as all goods generated by these obese individuals is lost.

“banning heroin.”

This is an awful example. Anti-drug policies cause drug wars, mass murders, cause consumers to spend even more money on the drug, and ultimately don’t stop the vast majority of individuals who would be taking such a drug from taking it. Billions of dollars have been poured into this thing and it hasn’t stopped anything, just squandered resources and killed more than would have died anyway. I’ve been personally affected by this stuff, I understand the horror of drugs, and it would be nice if we waved a magic wand and caused people to obey, yet this is not the case.

Both of your proposed laws would just cause anguish and suffering, not increase utility.

8

That’s both true and false.

If one examines utility theory, one is faced with a choice: either agree with the deconstruction I have presented or conclude that the raison d’etre of the masses is formless consumption.

I think we’d be able to get rid of all the drugs on the street if we hired more undercover “buyers” - and I mean unleashing a large portion of the population on undercover missions.

9

Nutty as squirrel shit.

10

Indeed, because they are fictions. Their supposed choices are merely only some people of the country choosing something for everyone (and making the choice largely because it obligates others to go along with it).

11

*most people

12

Anyways, I concede the point about concentration camps.

13

As was stated earlier, countries cannot choose. Only individuals can. Also, countries cannot vote. Again, only individuals can. While a majority of individuals can vote to ban the importation of automobiles from foreign countries, it cannot be said that a country “voted” or “chose” to ban said automobiles.

To entertain your theory, let us assume that a majority of voters in the US voted to enact a tariff so high on imported automobiles so as to effectively prohibit them, and to even put an excise tax on vehicles produced domestically by foreign companies so that these, too, would be effectively prohibited. So, for example, these imposts would be such that a Toyota would cost $500,000, regardless of whether it was produced in Tokyo, Toronto, or Tampa.

Now, we know that this reduction in the number of choices can only lead to higher prices and lower quality (than otherwise would have existed). Surely you are not disputing that more competition results in lower prices, higher quality, and greater distribution, are you?

From an economic standpoint, this simply results in a transfer of wealth from the consumers to the protected companies (in your scenario, Ford and GM).

The demonstrated preferences of the majority of individual voters may be to see a transfer of wealth from consumers to the protected companies. They may find some personal utility in this. Remember, utility is not measurable. There are no “utils.” But it is highly likely that the minority of individuals do not find any utility in this redistribution of wealth, the reduction of variety, or the subsequent reduction of the rate of increasing quality.

And of course, if 100% of people voted to enact such a policy, it would be completely unnecessary, since they would not buy the Toyota when they had the chance anyway. The only thing they could accomplish would be to prevent future generations that did not have a say in the matter from having the freedom to choose.

14

It’s very difficult to trace the path from ex ante to ex post in the sphere of political action. The average Joe is not an expert on politics, economics, etc. so is no in position to judge whether or not a politician will benefit him or not. On the other hand he is unique suited to ascertain whether or not a consumer good satisfies the need he had for it. If it’s crummy he knows instantly it’s crummy.

15

Actually, I believe that Rothbard acknowledged that you can say this if you clarify your terms. The fact that the majority of a given population choose to adopt socialism pokes a big hole in the reconstruction of utility economics.

16

“Nutty as squirrel shit.”

I seriously laughed out loud at that and Buzz Killington verified this answer

17

“If one examines utility theory, one is faced with a choice: either agree with the deconstruction I have presented or conclude that the raison d’etre of the masses is formless consumption.”

What does this mean?

“I think we’d be able to get rid of all the drugs on the street if we hired more undercover “buyers” - and I mean unleashing a large portion of the population on undercover missions.”

I don’t trust your ability to predict how to properly solve the drug problem when billions of dollars in dozens of countries have failed to effectively do so.

18

Sure, if you define “0” as “1” you could say that 0=1. And if you clarify that by “country chooses X” you mean that < or = 50% - 1 did not choose X, sure. It wouldn’t negate the fact that the individuals that make up the < or = 50% - 1 did not demonstrate a preference for collectivism and may not see increased utility from the adoption of such policies.

I find it somewhat funny that many Austrian economists and libertarians claim that only individuals exist and act and “society,” “nation,” and “state” are fictional entities that cannot, in fact, exist or act, while collectivists maintain that society, nation, and state are real entities that exist and act and “individuals” are, at best, simply nuisances, and at worst, non-existant and irrelevant.

And that’s a fundamental truth: for collectivist theory to work, it must be assumed that, for all intents and purposes, “individuals” don’t exist and are, therefore, irrelevant.

19

I don’t know, but I thought it sounded profound.

They don’t want to solve the problem. The CIA is active in the drug trade. Are you going to tell me what’s wrong with my strategy?

20

Also, banning fast food may be a better solution than putting obese people in concentration camps.