Two newbie qs

Miscellaneous Newbies
1

Thanks to all who have answered my earlier qs.

  1. Keynes says recessions are caused by lack of demand. I think I get why his proposed solutions to increase demand worsen the original problem.

I also have read that Mises says recessions are caused by too much loose money running around causing malinvestment. And his solution is to let things take their course without interference.

My q is, is there a refutation or disproof of Keynes’ theory of the cause?

  1. About Intellectual Property. What is the bottom line reason to say there is no such thing as ownership of IP? Because it is intangible? That’s the only one I heard.

Also, who is to say what things fall under possibility of ownership? I think the Austrian definition is that your body and what tangible object or land you improve is yours. Is this definition an axiom, ancient universal custom, common sense? I presume it is not God given law. That being the case, why cannot we define intangibles as capable of being owned?

If you can refer me to an audio or short article that answers these qs in simple language, or can provide an answer yourself, I will be grateful.

2

  1. See The Failure of the New Economics by Hazlitt, which is a paragraph by paragraph refutation of Keynes General Theory.

  2. As I understand, IP does not exist because it purports to control what others do with their own body and resources. Why can I prevent someone from using their own resources and body to create something that I thought of originally?

3

Thanks for the prompt replies.

  1. Uh oh, so I have to go through a 700 pager to get the answer?

  2. That’s a fine reply that is totally new to me and very simple.

If I may expand a bit, I think a guy who goes around bragging how he uses torrents to get all kinds of copyrighted stuff is looked upon with scorn and contempt by many people. Are they just misguided souls, followers of a false benighted religion?

I find this to be a very emotional confusing issue.

I mean, I can understand and feel right down to my bones what I see as the gist of Austrian economics in one sentence: having the gov’t in economic activity is like having Dracula as a roommate. But I don’t have that clarity about IP.

4

Honestly, I am not sure. I am not extremely well read in Austrian Economics. I am sure that someone else here has a link to an article or podcast. I do vaguely remember one a few months back that dealt with Keynes’ theory, but I’ll have to dig around a bit.

As to people who think someone who uses torrents is bad, they are probably misguided to a point. However, most people would be appalled when someone went bragging about breaking even the smallest of laws, whether they are just or not. I do not think they care whether intellectual property is justifiable or not, just that what this guy is doing is illegal.

I personally am undecided on IP. I oppose any government versions of IP, but I am not sure how IP would be dealt with in the free market.

5

Many Austrians oppose intellectual property on the grounds that it’s a coercive monopoly established by government. In other words, without government interference, it wouldn’t exist except possibly in some much less ubiquitous form.

Personally, I adhere to the notion of property which covers only scarce resources. Physical books, CDs, etc. are scarce, but ideas and music themselves are not, because they can be replicated infinitely at negligible cost.

6

I agree. However, some Austrians (I believe) think that IP can exist without governmental interference. I am leaning against this position and IP in general, as I am not sure how IP rights would be protected in the free market, and, of course, I am not sure they exist at all.

7

This is not a simple question. Property (scarcity) is the underpinning of everything Austrian. There is a lot to read.

As far as IP, as it stands today, it is a state license to control what other people may and may not do with their property. That is, if you have IP over an engine design, you can stop me from using my steel to make an engine with that design. You are limiting what I can do with my property through the power of the government (violence). Typically, the state is meant to protect property rights, but in the case of IP, they have to violate my property rights to protect your IP. At one point, your IP exceeds my common property. You assume control over it when there is a conflict.

Add to the mix, that two people can come up with the same idea, at the same time independently, and so exclusive origination of ideas is nonsense IMO.

People ask questions hoping there is a blanket view from the Austrians. This is generally not the case. You really need to understand the reasoning that brings us to these ideas and positions, just giving you things to “believe” or “accept” isn’t very valuable IMO.

8

Liberty Student,

I was a bit surprised by your last paragraph. I guess you were assuming I wanted to be given something to believe or accept. Maybe you thought this because I asked for a short answer.

Rest assured, I asked precisely because I want “to understand the reasoning that brings you to the idea and position” that IP is a fiction.

As for hoping for a short answer, my experience has been that a person who really knows his field can often answer a q about it [albeit very generally] in a paragraph of or two.

Your middle paragraphs say that 1. The gov’t has messed up yet again, this time with IP. Well they have messed up the school system, does that mean there is no point in getting educated? Just because the gov misuses IP, that is no argument that IP is nonsense. 2. There are some cases where who should have the IP is unclear. I’m sure there are cases where rights to tangible property are unclear as well, with two people both seeming to have a good claim. This doesn’t mean that IP or tangible property is nonsense.

9

I am not sure if I could provide you with a satisfactory answer, but anyways.

Keynesians usually are ignorant of the inter-temporal stages of the production process. All that they concentrate on, owing to the spontaneity of the production of consumer goods in the modern economy, is the consumer or the final goods market.

So, they are under the illusion that nothing happens beyond the consumer market. This is the reason Keynesians are against savings. They attribute recessions to lack of consumer demand, caused by increased savings.

Keynesians have, through all these decades, been ‘proving’ their theories with GDP figures. The problem with GDP figures is, they only take into account the final goods that are produced in the economy during the year. In other words, it’s basically a scale for the consumer market alone. It takes no account for the preceding stages.

Suppose if people save money and the amount is directed towards investment projects, the consumer market will shrink causing the nominal GDP figures to lower. Keynesians take this to be a bad sign. This makes them ask for all sorts of crank remedies, like loose monetary policies, fiscal spending etc.

While both loose monetary policy and fiscal spending leads to malinvestments, loose monetary policies would take a little more time(than fiscal spending) to boost nominal GDP figures since the new money has to percolate the economy which takes some time. Fiscal spending on the other hand gets the multiplier running rightaway!

Regarding refutation of Keynes, I think it’s obvious now, Keynes had no idea of the intertemporal character of the production process which led him to believe that only money spent by consumers gets the economy running. What is unseen is, that the savings are invested in remote stages of the production process(by pulling away resources from the stages nearest to the consumer goods sector–because people abstain from buying consumer goods when they decide to save) boosting the productive capability of the economy.

10

If you want a short critique, try Chapter 7 of Money, Bank Credit, And Economic Cycles by Jesus Huerta de Soto.

11

Can someone tell me how they think quality works of fiction and to a lesser extent non fiction books will be produced without intellectual property?

12

Second Tolkien Story

Let me close with a second story about Tolkien and his famous trilogy. The first edition of The Lord of the Rings to be published in the United States was a pirated edition from Ace Books. For reasons which I now forget, Tolkien could not take legal action against Ace. But when Ballantine came out with its own official author-approved American edition of The Lord of the Rings, Tolkien started a campaign against the Ace edition. The Ballantine edition was released with a notice from Tolkien in a green box on the back cover stating that this was the only authorized edition, and urging any reader with respect for living authors to purchase no other. Moreover, every time he answered a fan letter from an American reader, Tolkien appended a footnote explaining the situation and requesting that the recipient spread the word among Tolkien fans that the Ace edition should be boycotted.

Although the Ace edition was cheaper than the Ballantine, it quickly lost readers and went out of print. The boycott was successful.

It might be objected that Tolkien devotees tend to be more fanatical than the average readers, and so such a strategy of boycott could not be expected to succeed in ensuring such loyalty generally. True enough. But on the other hand, Tolkien’s boycott was entirely unorganized; it simply consisted of a then-obscure British professor of mediæval language and literature scribbling hand-written responses to fan letters. Think how effective an organized boycott might have been!

13

OK will do. Thanks for pointing me to that book.

And thank you for the earlier reply as well.

14

Now you got me curious. Whats the first Tolkien story?

15

Ha [:D]

http://libertariannation.org/a/f31l1.html

:slight_smile:

16

The same way they were produced before IP?

I hope you realize, LvMI gives away almost all of its books for free. What sells, are the hardcopies. They sell, because people will pay for someone to produce the book in an analog format.

The same reason why people go to see bands perform live (analog) off of the digital versions they share for free.

17

Indeed, I was. You want me to condense months of my research into IP into a few quick sentences for your enlightenment? C’mon now.

Also, your balking at reading a 700 page book was disappointing. If you don’t plan to read, you won’t get very far with AE.

This shows you did not understand what little I wrote, trying to meet your intellectual requirements. Making my point that you can’t get the answers you seek in bullet point form. Some understanding and introspection on your part is necessary.

Education is irrelevant to the discussion. First, one has to understand what property is, not what government does. The missing foundation for IP has nothing to do with the state, and everything to do with its nature as property. In order to understand that, you have to understand what property is, and is not.

The reason why IP is unclear, is because it is a fiction. It is a nonsense people believe in without thinking. In order to have an “IP right” you have to violate the property rights of others to enforce it. This violates the entire principle of property ownership from the start. It is a paradox.

18
19

Perhaps some more gifted soul will be interested in entertaining you because I am not.

20
  1. Keynes says recessions are caused by lack of demand.

My q is, is there a refutation or disproof of Keynes’ theory of the cause?

Chapter 7 of the DeSoto book I was referred to seems to hit the spot.

I’ll summarize what I “got” of it so far.

Keynes’ analysis: Mr Frisbee, owner of a frisbee factory, notices that people aren’t buying as many frisbees anymore [=lack of aggregate demand].

“What shall I do?” Mr Frisbee asks himself. “I know, I’ll start making less frisbees, since obviously no one is going to buy them.”

“But what about all those people who I am paying to make the frisbees?” “I got it. I’ll fire them.”

Enter the recession.

I’ll write DeSoto’s refutation in the form of a dialogue between Keynes and Mises.

Mises: So Maynard, how are you going to end this recession?

Keynes: We’ll attack the root cause. Not enough buying of frisbees.

Mises: And how will you do that?

Keynes: Oh posh, there are many ways. Have the gov’t buy the frisbees. Or hire currently unemployed people to do any work at all so they will have plenty of money and will buy frisbees once again.

Mises: But that won’t work because [insert correct reason here. Not the place for that in this post]

Keynes: OK then, we can give Mr Frisbee more money, or at least lend it to him cheap. He will build a new frisbee factory, hire more workers, these formerly unemployed wretches will now have money in their pocket, and they will buy frisbees. Aggregate demand has been increased, recession over, everyone happy.

Mises: But that won’t work because [insert correct reason here].

Keynes: OK, smartypants, what do you propose then?

Mises: I agree with you that we have to attack the root problem.

Keynes: Which is that people aren’t buying frisbees.

Mises: No.

Keynes: NO? I’m stunned. You disagree with my above mentioned incisive analysis?

Mises: Oh, it’s perfectly valid as far as it goes. But it’s like walking into a movie and watching it from the middle, not from the beginning.

Keynes: What do you mean? What’s missing?

Mises: You say the problem starts because people aren’t buying frisbees.

Keynes: Yes.

Mises: But tell me, WHY aren’t they buying frisbees all of a sudden?

Keynes: Who knows? Who cares? Probably because they are stupid or cowardly or suddenly suffering from some mass insanity. What’s your point?

Mises: If we knew WHY they aren’t buying, maybe we could figure out how to get them to buy again.

Keynes: HA! And I bet you think you know why they aren’t buying, eh Professor Freud?

Mises: They aren’t buying because they have been fired from their jobs.

Keynes: Ho ho ho. I said Person A gets fired cause Person B isn’t buying frisbees. You are saying person B isn’t buying frisbees cause he himself got fired. But what got Person B fired? Gotcha there, hahaha.

Mises: Person B got fired because his employer, Mr Entrepeneur, was in the middle of building a factory and ran out of money. He had no choice but to send Mr B home and gaze sadly at his unfinished shell of a factory. [Insert explanation how Mr Entrepeneur got into this fix. Bottom line: The Fed printed too much money and Mr E got hold of enough of it to start his factory, but not enough to finish it].

There follows long discussion how to get Mr Entrepeneur out of his mess so he can rehire Mr B to finish the factory. Mises explains how helping Mr E is not gonna solve the problem.

Keynes: So what then? You have shown that every possible thing the gov’t can do is worse than useless.

Mises: There are still plenty of people with money and good ideas. We just have to wait patiently for them to start their schemes going, then they will hire Mr B to build their factory, and all will be well.

Do I have it right?