yuberries, there’s nothing incompatible between postitive economics and fatalism, actually. Now, if you want an economist to act as a preacher who shares the gospel of normative economics, then that’s another matter.
Isn’t there a striking inconsistency between the theory of ‘market failure’ and the theory that everything is efficient, whatever happens?
Yes. Like I said, I personally do believe “market failure” is a valuable concept when discussing theoretically optimal outcomes.
Stigler is, as I see it, insisting that social institutions are as efficient as is realistically possible.
Oke; thanks. (I know you’ve answered it earlier, but I just wanted to be absolutely sure.)
So you don’t accept the Stiglerian vision? Or do you have any way to reconcile them, e.g. by loosening one or more parts of the theory?
The more I thought about Stigler’s argument, the more I found his conclusions unavoidable.
Essentially, I believe economics offers us good descriptions of optimal outcomes; however, I believe game theory better explains why we should be pessimistic. I would have enjoyed Stigler supplementing his argument with a more game-theoretic approach; of course, I do believe the assumptions of economics are a sufficient basis for his point, as well.
If we understand society as an n-person competitive game, then strategic interaction among rational individuals (who act to maximize payoffs) has produced exactly what we see now. If you can conceive more efficient worlds, that’s great–but then you need to scratch your head and ask, “Why aren’t we there?” It’s not enough to protest that the government is prohibiting “freedom”; the government is as natural as any other social institution, the outcome of rational behavior. If the State is imposing heavy costs, then so are many other features of the natural world, and all we can do is minimize those costs as much as seems rational. It’s much like losing weight, you’ll do it as soon as you truly believe the benefits outweigh the costs.
Wow so you produced a 19 page thread, to tell us that, uhm…
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there is a reason there is a state
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there is a reason it is still exists
EVERYONE ALREADY KNOWS THAT. The point is that people are underestimating the cost of the state, and one role of this website is to make them aware of it. Thus changing the relevant costs of the game, and thus eventually changing its outcome.
First, I–as an individual–did not produce a “19 page thread,” and I’ve already tried to resign my part in it.
You sound like an anti-smoking ad to me: “If only people truly knew the cost of smoking, they’d stop!” There are a myriad of educational programs with the same pitch: “If only people truly knew the cost of wearing fur, they’d stop!”; “If only people truly knew the cost of overeating, they’d stop!”; “If only people truly understood the cost of capitalism, they’d stop!”
Whereas you see the mass of people as being fundamentally misguided about their own interests, I do not.
I’m with StrangeLoop on this one. I think its really hard to believe hat for hundreds (thousands?) of years people have been brainwashed or have been simply too dim to understand the costs of the state. Not to mention, what are the implications for things like advertising? If people can be misled by the state to act against their own interests, who says companies or other individuals couldn’t do the same? Yet I doubt I will see anyone posting that argument any time soon.
And just a side not. Yessir, I don’t think the purpose of this board is to exclusively promote anarchism.
Whoa, really long thread I haven’t completely read, so forgive me if this contention has already been raised:
Why is it assumed that any/all desired benefits increase efficiency and reduce costs? Instead, is it possible to imagine a benefit that increases cost?
I live in a burglary prone area
I value my safety over my capital
I invest capital in a fence
I am safer, but have less free capital
Perhaps the government is efficient at achieving its aims (e.g., amassing and consolidating power), but this begs the question:
If so, so what?
I don’t understand how this proves/disproves the state’s efficiency in any of the stated goals of politicians (e.g., providing an enviroment in which the citizens can pursue life, liberty, and hapiness).
We haven’t gotten to the point were government’s goals and the majority of the populace are opposed enough to cause revolution/insurrection, but that has occurred in the past. The real reason seems to lie in the old adage:
Power corrupts
It is not that the state continues to exist once the regime is toppled, rather once the old regime falls, a completely new or reformed regime is immediately installed, because the successful revolutionary has managed to wrest control of a machination (the concept of nation-state) with an extremely effective means for that person/people to achieve their ends: fear (and usually a religion-based air of legitimacy).
Even using this argument, it is apparent that the state is wholly inefficient at extortion. Protection rackets achieve profits with much less resources at their disposal.
Simply put, it seems states have been so successful for so long for a few reasons not related to their inheirent efficiency at reducing costs:
The colusion of religion and politics (granting kingship to warlords)
The desire of individuals to pursue their goals utilizing any means available
A populace that values security over liberty
If people can be misled by the state to act against their own interests, who says companies or other individuals couldn’t do the same?
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Sure they can, if you had explicit previous knowledge of their goal and they act againts it, you can establish that a company or individual has misled someone. You generally however know nothing on their explicit goal. I believe Rothbard even used this argument against some government action in MES.
Also I was talking about the mises institute in general. You think they provide this site for our fun?
yessir,
well, just as a side note, this forum existed long before lvmi supported it (it used to be the austrian economics forum, i don’t know if heroiclife was getting funded in some other way or if he originally built it for his own amusement).
anyways, given that lvmi is now supporting this forum, it still doesn’t follow that it is a tool to advance anarchism because lvmi is not itself in the business of advancing anarchism exclusively. As the website says:
The Ludwig von Mises Institute was founded in 1982 as the research and educational center of classical liberalism, libertarian political theory, and the Austrian School of economics.
http://mises.org/about.aspx
i believe that the forum is supposed to be consistant with these goals in that it allows people to come together and discuss classical lberalism/libertarian political theory/or Austrian economics. but even then the forum is clearly not confined to these topics (why else would they have a “general section”?), just like not every conversation you will have at Mises University is about Austrian Economics.
oh and i forgot to actually address the point of the post.
Sure they can, if you had explicit previous knowledge of their goal and they act againts it, you can establish that a company or individual has misled someone.
you have weakened my original statement. saying people can be misled is one thing. but to imply that most people would be better off (on net) without the state despite the fact that most people currently support one form of government or another is a much a stronger argument. Here you are having millions of people acting against their own best interests because they are either brainwashed or too dumb to realize it.
once you admit that such a state of affairs is possible, it seems that a great deal of austrian (and mainstream) economics would simply fall apart. for example, if most people disregard their own interests with enough persuasion, why would we expect demand curves to slope downward? it seems like we would lurch over into galbraith’s “dependency effect” territory where demand is not independent of supply because consumers do not have “soverign preferences” (an argument austrians like hayek totally rejected and with good reason).
I am not going to pretend I speak for “austrians”, most people will know more than me. From what I understood, AE does not need the nice diagrams and the mathematical definition of up/down sloping curves. These may take these shapes because of human action irregardless of how they act. Supply and demand are also not independent as far as I can tell. Once again those restrictions were necessary to solve the mathematical model, not in the austrian sense of supply and demand curve (marginal sellers buyers etc). But someone else might be more clear than me.
Are you telling me that lets say, the 60 million people of Iran, are now collectively choosing a government that is in their best interest?
Could you tell me why a (political) revolution happens?
Exactly.
rothbard argued in mes that demand curves must always slope downards.
Therefore, as the price decreases, the quantity demanded must always either remain the same or increase, never decrease. Similarly, as the price decreases, the amount offered in supply must always decrease or remain the same, never increase. There fore, the demand curve must always be vertical or rightward- sloping as the price decreases,
http://mises.org/rothbard/mes/chap2b.asp#_ftnref2
however, i believe that some austrians these days recognize the possibility of giffen goods (where demand will slope upwards), though i could be wrong. in any case, no one i know of (mainstream or austrian) believes upward sloping demand curves to be the norm.
but your argument seems imply that it is a distinct possibility (if not a strong likelihood)
ps* “Are you telling me that lets say, the 60 million people of Iran, are now collectively choosing a government that is in their best interest?” just to clarify. i would say that the people of iran may prefer a more liberal government than the on that exists ignoring all other factors (that is not evident from people i’ve met from iran), but that they percieve the costs of changing to a more liberal government is greater than the benefit the switch would entail. in that sense, you could say they are acting rationally or “in their best interests”.
He is talking about direct voluntary market exchange. It is one thing to convince people (and maintain that using an army) that health care can not be provided by the market, than to convince people that they should buy more goods at higher prices, when in the course of market competition lower prices are available. Yet it happens, it is called marketing. Some might say, It does not happen technically because now you have changed the ‘good’ in the eyes of the consumer.
I think even Mises would have agreed that the governments that exist are ultimately the result of rational action. To deny this is ultimately to deny human action. Yet, I think Mises would have rejected, for reasons similar to those given by public choice theory, that democracy or other forms of representative government can cause governments not to act in their own institutional interests (an assertion often made, usually implicitly, by democracy apologists). I see no reason to believe the interests of government come into conflict with the interests of individuals less frequently in democracy than other forms of government.
I guess what I’m trying to say is that “collective choosing” has no intelligible meaning and I think that Student and StrangeLoop agree, yet we cannot deny that the existence of the government of Iran, or any government for that matter, is the outcome of human rationality without denying human action.
Clayton -
Who?
Ah yes, rationality is only as useful as you are learned.