It seems you answer is “I don’t know. Whatever the villagers decide will be the right answer”. But you could be a villager too. What’s your personal vote? lets say the banks have all just opened up today and you have to make a choice yourself.
Are we reading the same article? “http://mises.org/daily/3925”? The article does not contain the word “technologically”.
The question you need to be asking is why did it NOT surprise that 1%. And then you need to pick up a book from their school of thought and read it. 
yes we are reading the same article.
you are right that the article does not contain that word. what’s your point?
Maybe I was sloppy in my language at some point. I don’t want to outlaw all non-productive investments, I just want to get the guys wanting productive investments to be at the front of the queue for the limited investment resources ahead of the guys wanting non-productive investments.
Yes.
At least the “best” answer as could exist among any human(s) at the time (before the fact). Certainly better than your deciding for all of them.
i could care less what you want. and neither could the people who are actually deciding who to loan their savings to. mind your own business.
I’m confused, could I ask you to cut and paste a paragraph which best highlights what you are asserting.
That indeed does happen, without intervention, in appropriate proportions and degrees, as individual bankers assess the profitability, risk, etc of the prospective borrowers, business plans, and loans. You might develop a different idea of “appropriate”, especially after the fact, but that’s just you either trying to play “God in hindsight”, or trying to control others’ value judgements into conformance with your own.
metal fabrication factory is first and foremost a process of technological productivity; factors are combined and physical products are created through a technological process. calling what is produced, a “valued product”, depends entirely on further entrepeneurs and ultimately consumers actually valuing the technological product
Say I’m one of the villagers. Its partly my savings. I care. I want the guy to make his machine. I will choose the food bank that lends productively. I think the other villagers will generally concur.
The villagers are completely free. I think they will mostly choose the bank that only invests productively. I think the only reason that people don’t choose productive-only-investing-banks today is because our society is too large and complex and the money system too obfuscating to allow them to understand the full consequences of their savings choices.
“Unfortunately, the federal and state governments constantly enact legislation that makes the employment of workers more costly and in turn makes business expansion riskier.”
Agreed. This is a bad thing.
So wealth-producing businesses, like metal fabrication and the like, have every incentive not to borrow money from a bank to expand their operations and not to wander into a wider thicket of onerous employment rules by hiring more workers."
So he’s saying "not to borrow to productively invest is a bad thing… " presumably implying “to borrow to productively invest is a good thing”.
Agreed.
How is any of that in conflict with anything I’ve said?..
you dont seem to understand that any technologically productive process that is not expect to yield sufficient return to have investment money directed to it, over ‘consumer’ demand for the loanable funds, is simply not worth doing; not worth doing from the perspective of the consumers. both the lenders and the savers. if you use legal means to ‘force’ the loans that you think should be made, you will merely change the form of the capital consumption, you wont succeed in eliminating it.
it is exhausting trying to explain that intervening to fix interventions is a fools errand.
I do understand this point. Not all “productive investments” are worth doing. Some are so harebrained that they will fail, or produce minimal returns. That’s why i made my suggestion about the guys in the queue. Let the food bank dish out the funds to the productive investments he deems will work, rejecting the schemes that he thinks will fail. Then, if there is any food left over, he can lend that out to non-productive investments (again subject to the banker considering the risk of default).
no, you are saying ‘good and bad’, doug french is doing a counter-factual analysis; he is drawing attention to government introduced dis-equilibria.
As a teaser I could challenge you. is borrowing any amount to productively invest a good thing? i.e. 'how much?
anyway, maybe we should go back to basics and start to build are arguments back up
do you understand the difference between technological productivity and value productivity?
Really? In our current banking system? With zero interest rates, and the fed etc? I don’t think so.
Can you describe an ABCT boom and bust cycle without ever mentioning the idea of too much lending (= creating money) to speculate on non-productive investments?
I have no idea what that means.
That’s a hard question, each case is different. Do you want me to come up with a formula? Tell me where this is heading, or add a bit more context and I may be able to give you a better answer.
No. Please enlighten me.
you seem to lack understanding of why agents lend out their funds. It seems to me you are confusing their self-interested behaviour with a 3rd party central planner perspective.
I have savings to invest. I want a degree of security and a degree of return on my investment. What motivates me are these two concerns. they are completely my business, and no one elses, not even yours mick.
If a consumer who I trust to make good on his loan (maybe i trust him more than a new business startup) wants to take an expensive holiday of a lifetime now, and pay me back over years( maybe he has an annuity or gets income from a trust fund) why would i put him back to the queue because his use was not ‘technologically productive’ ??? (though it is wealth productive because he would subjectively benefit from the expenditure)
what he wants squares much better with what i want than an entrepreneur who has too much of a risky business plan for my tastes, or one that is a sure thing but can expect to make low low profits.
Of course, quite often, entrepreneurs will outbid consumers for loans; where consumers have a lower time preference ‘overall’ (ick!); yet if consumer preferences are such that some proportion of consumers time preferences are much higher than the prefence of others, there is a definite ‘place’ and ‘rationale’ for consumer lending.
the free-market price system is an un-improvable methodology for coordinating savings/investment (even if it is not utopian perfect)
how would things be without the government. - the government is a fact. but the analysis imagines that fact to be ‘countered’
i already did early, but i will repeat. technological processes produce physical items by virtue of their technological application. these ‘outputs’ are either valued or they are not. they are either goods (it was a worthwhile investment) or so much junk (malinvestment)
I’m trying to figure out why Mr. Banker would lend to the guy who wants to extend his house. Where would Mr. House Extender get the reseourcess to pay back the loan? If the Mr. House Extender won’t create any wealth that can be used to pay back the loan, why would Mr. Banker lend him the money?