Economic Myths amongst libertarians

Economics Economics Questions
1

And I don’t mean the type of folks who are just ever so slightly more libertarian than a moderate. This is not about folks that are just in favor of decrim of marijuana, gay marriage, and slightly lower taxes. I am talking about amongst Ron Paul supporting, strict constitutional, give me liberty or give me death, non-austro libertarians.

A few that I have noticed, really push for self-sufficiency, to a point where I am not sure if they understand the division of labor.

Although they might not call for tariffs, I still see a lot of them talk about the benefits of something in that it will ‘get more people to buy local’

I will also see them using post hoc’s left and right. Watching Stossel last night was painful because both sides were talking about how a change on their side of the argument (gun rights) which happened at around the same time was the cause of a general reduction in crime over a given period.

Then I ran into this on a very libertarian forum (Free State Project):

“Its the lack of capital investure in the properties that resulted in the correction.”

"People that write articles for mises, always denote some superficial effect of the Federal Reserve on interest rates... but that isn’t what caused this crash. The lack of equity, and loss of social stigmatism to default, is.

The world went from 20% down payments w/closing costs and absolute fear of default… to no money down w/ seller covering closing costs and default is the result of the lender trying to defraud you."

“The point is that interest rate changes didn’t lead to the crisis. A lack of equity, and social acceptance of default did.”

"I thought the crash was caused by the federal government pushing lending institutions to use unwise lending practices, plus the quasi-government agencies Fannie Mae and Freddie Mac, through their purchase of standard mortgages, assuming all the risk (meaning the taxpayers assume the risk) of bad mortgages.

I hadn’t heard that this real estate crash was caused by the artificially low interest rates, though I am sure others have been."

"Not quite. What is failing here is the understanding that fractional reserve banking is a natural process… not a government induced one. The Federal RESERVE System is designed to limit fractional reserve banking… not expand it.

[the previous poster] is correct. Because of the desire to broaden home ownership (American Dream)… low equity (higher risk) was incentivized.
Market manias existed prior to the FED, and while on the Gold Standard"

"No. Banks outside the system were operating at as high as 24 times leverage… so it didn’t take government.

Also the Gold Standard takes government… as its fiat (by decree)."

"All the investment banks were outside the system. LB was at 24 times capital reserves when it failed… FRS is ten.

The tender laws are to restrict the States, and enforce a standard that is easier to tax.

By the way, there was no universal acceptance of gold, silver, etc. as money. That was created by government."

Then there was some more ignorance about what makes a good money. The guy suggested that wheat would make a better money than gold essentially ‘because you can eat wheat’

2

I was about to start a thread asking if there were any libertarian keynesians. Since economic science is not informed by morality.

Cus business is driven by the animal spirits!

But yeah… some people say they’re afraid to call themselves anarchists because of all the communist socialist punks who have ruined the name. I’m getting to be that way about libertarianism.

3

Great. The sooner we can get over fighting over names the better.

4

post hoc though is a logical fallacy, not necessarily an economic fallacy.

And sometimes, it may be the outcome of free markets that people would buy more local -thanks to the massive gov. power of corp.-farm. interests I would tend towards that becoming true.

But I would also concur on the whole emphasis on self-sufficiency.

Another fallacy would be the need to control immigration and the labor supply.

5

Agreed. People need to stop changing names all of the time. Michael Moore says that he’s not a “socialist”. He’s just “believes in democracy”.

By the way, if any of you guys forced yourselves to watch Capitalism: A Love Story online like I did (I got through 20 minutes until I seriously had to stop watching it), it started with this farm being taken away from some reason and then he narrates: “This is capitalism. Taking. And then giving. But mostly taking.” Sounds like… socialism.

On a side note, how do you ‘quote’ someone else who has posted earlier to whom you’d like to respond. I’d like to be able to do that instead of answering an omnipresent member.

6

You type “[qote]” before the phrase you wish to quote, and “[/qote]” after. I mispelled “quote” on purpose, but when you do it, spell it right.

For example, to quote Milton’s famous phrase you would write:

[qote] They also serve who merely stand and wait. [/qote]

Here’s what it looks like when you spell “quote” correctly:

7

I find non-austro libertarians to be very weak on on their gold arguments as well. saying that it has ‘intrinsic’ value and other such things.

8

However it is precisely low interest rates that leads to the lack of equity… interest rates being the price at which savings are sold to borrowers, if these are priced below the point at which supply meets demand you will see over-borrowing (for investment and consumption). In the case of borrowing for consumption, this is effectively just the consumption of capital and in the case of borrowing for investment, since there is not enough supply of savings in the market place to fund all of the investments, at some stage a bunch of the investments must (mathematically) go bust, with the much of capital that was invested being lost (that which can’t be converted easily to other purposes - the time invested for one).

In the US and in Europe, a consistent mismatch between savings and lending has been funded for quite some time by borrowing from abroad (mostly by governments), which has postponed the realization that there aren’t enough savings to keep funding much of the consumption and investment that seemed and continues to seem profitable at current interest rates… And to make matters worse, many investments that obviously weren’t profitable were bailed out by governments, to further postpone realization of the inescapable consequences of low interest rate policies.

Certainly government legislation to encourage investment in housing skewed markets even further, so low interest rate policies aren’t entirely responsible - but their contribution can hardly be understated.

9

Thank you! That’ll be a lot of help from now on!

10

all non-austrian libertarians trip themselves up over the necessity of natural monopolies and they think gold is made of magic.

it’s not even a case of a poor understanding of economic theory, they are just ignorant and self-contradictory. for instance, they will all readily agree that the private sector will universally out perform the public sector. they then go on to say that defense and justice are services that can only be provided in a monopolistic fashion similar in all ways to government ownership. if they try to dance around that by saying this isn’t a government monopoly but a type of shortcut to the most effective market solution, they will not comment as to why they are certain this will apply to defense/justice but not to bottled water and shoes.

11

I’ve noticed that there is a lot of anti-trade and anti-immigrant bias among the “libertarian” movement due to the involvement of paleo-conservatives. Also, there are a few anarchists who adhere to the new classical/rational expectations school of thought.